Co-op Bank announces rescue plan
The Co-operative Bank has announced details of a plan to fill the £1.5bn hole in its finances in a move it will be hoping will help improve brand perception, hit since news of its financial difficulties emerged earlier this year.
The bank has agreed a complex “bail-in” process that will see bond holders offered shares in the bank. The Co-operative Group, which also owns food, legal services and funeral care businesses, is also providing capital.
Although the “bail in” avoids a taxpayer bail-out, the need to exchange bonds for shares does mean the bank will have a listing on the London Stock Exchange, raising questions about whether the bank can still position itself as a mutually owned, ethical alternative to high street banks.
Chief executive Euan Sutherland, however, told the BBC this morning that its approach will not change.
“We have always been a PLC wholly owned by the Co-operative Group. The majority of the bank will still be owned by the Co-operative Group. There will be no change to our ethos or the way we run our bank”, he added.
The Co-op will be hoping the move helps rebuild its brand reputation, which has suffered following ratings agency Moody’s decision to downgrade the bank’s debt rating last month.
Yougov BrandIndex data shows Co-op’s Buzz score – a net balance of the positive and negative things people have heard about the brand – currently (14 June) stands at -15.4, down from 5.8 in April, putting it bottom of a list of 27 bank brands.
