Written by: Keith Tully
Date: Tuesday 14th February, 2017
The Co-operative Bank has been put up for sale in its entirety four years after it came perilously close to collapse before being acquired by US hedge funds.
With its long-term future uncertain, the bank’s board is seeking new owners for its business, which is a major employer in Manchester and has millions of customers throughout the UK.
The bank is known for taking an ethical stance on a variety of issues but was found to have a £1.5 billion hole in its finances in 2013 and is currently a loss-making operation.
In addition to its financial woes, the bank suffered considerable reputational damage in 2014 after its former chairman Paul Flowers was fined for possessing a number of illegal drugs and was subsequently dismissed as a minister of the Methodist church.
A financial rescue deal in 2014 saw the Co-operative Bank come to be owned largely by bondholders and by American hedge funds.
That deal saw the Co-op Group, which runs large supermarket and funeral businesses in the UK, reduce its ownership of the bank from a majority position down to 20 per cent.
Despite efforts to turnaround the bank’s financial position, little tangible improvement has been achieved to that end over the past four years, with its chief executive Liam Coleman blaming persistently low interest rates in part for that lack of progress.
The Co-op Group has expressed its support for the decision to put the Co-operative Bank up for sale.
“We are focused on finding the best outcome for our members, 2 million of whom are bank customers, as well as the members of our shared pension scheme which is well funded and supported by the group,” a spokesperson for the group has said.
Liam Coleman from the Co-op Bank said in a statement: “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.”
“Since 2013, we have successfully addressed significant legacy issues, reduced the cost base and rebuilt our franchise and customer proposition,” he said.
Coleman admitted though that the turnaround plan for the bank “has 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”.
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