Co-op Bank puts itself up for sale and reassures customers that their money is safe
The bank stressed it was “business as usual” for its four million customers
THE Co-op Bank is putting itself up for sale and is inviting offers to buy all of its shares.
It said that it has been struggling with low interest rates and the cost of turning the bank around after experiencing troubled times.
The bank - which is 20 per cent owned by the Co-operative Group - almost collapsed in 2013 and had to be bailed out by US hedge funds.
"The board is commencing a sale process, something always considered a potential outcome of the turnaround plan, alongside considering other options to build capital and meet the longer term capital requirements applicable to all UK banks," the bank said in a statement.
The bank stressed that it is “business as usual for day-to-day banking” for its four million customers.
Last week the Co-operative Group embarked on a top-level shake-up that will see Richard Pennycook step down as group chief executive.
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The move, which will see food boss Steve Murrells take the helm, was accompanied by comments from chairman Allan Leighton that the Group could pump more money into the lender.
But the bank's chief executive Liam Coleman said: "While our plan 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, 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."
The bank said it is also considering options other than a sale to build capital, including raising cash from new and existing investors.
A spokesman for the Bank of England's Prudential Regulation Authority said: "The PRA welcomes the actions announced today by the Co-operative Bank.
"We will continue to assess the bank's progress in building greater financial resilience over the coming months."
What does this mean for Co-op Bank customers?
In the short term customers will see no changes as the bank will continue as normal.
A spokesperson for Co-op Bank told The Sun Online that today’s announcement has “no impact on the products and services” that customers have with the bank.
As with other UK banks, customers of Co-op Bank are protected by the Financial Services Compensation Scheme (FSCS), meaning a maximum of £85,000 per person is protected if the bank goes bust.
Andrew Hagger, of Moneycomms.co.uk, said: “A sale isn't going to happen overnight and I'm sure the regulator will be monitoring the situation closely.
“Some customers have chosen to bank with Co-op because of its ethical values - unfortunately if it gets taken over or swallowed up you would have to question whether such values would still exist.
“It may be unsettling but I don't see any reason for customers to panic.”
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