The UK’s Co-operative Bank is for sale 

Mon, 13 Feb 2017 | BUSINESS SALE

Britain’s Co-operative Bank has put itself up for sale in order to meet regulatory requirements and improve its capital reserve.

The retail and commercial bank has around four million customers and since 1992 has set itself apart as being ‘ethical’ in its marketing approach. This meant not investing in fossil fuel extraction, the arms trade, genetic engineering and other ‘non-ethical’ sectors.

The sale is the effective fallout of a tough few years for the bank. The primary ‘legacy issue’ centred around a £1.5 billion hole in the bank’s capital in 2013 which led to a ‘bail-in' rescue plan. This involved bondholders swapping their debt for equity in the bank and new bonds. Then there were serious staff issues. In 2013 the chairman of the bank Paul Flowers was forced to resign over concerns about expenses shortly before he was found guilty for drug offences. In 2016 the former managing director Keith Alderson and former chief executive Barry Tootell were banned by the Bank of England from holding senior banking positions.

A sale was always on the cards as an outcome of its turnaround strategy, though according to a statement released today other capital-building options were also considered.

In the statement, the CEO of the Co-operative Bank, Liam Coleman, said that the business had been “impacted by lower for longer interest rates, the costs associated with the sheer scale of the transformation and the legacy issues we faced in 2013”, but he then added: “there is considerable potential to build the Bank's retail franchise further using the strength of the brand, its reputation for strong customer service and distinctive ethical position”.

It is understood that several private equity firms plus other banks, including the TSB, are running a slide rule over the business.

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