The Co-operative Bank is to close around 50 of its branches as control of the lender is handed to a group of powerful investors as part of a rescue plan.
It is hoped that the revised plan will plug a £1.5 billion black hole in the bank's finances caused by the purchase of the Britannia Building Society and abandoned plans to buy hundreds of Lloyds Bank branches.
Investors who bought bonds in the troubled lender, including US hedge funds, will be given 70 per cent of the bank, leaving the Co-operative Group with just 30 per cent.
The funerals-to-supermarkets group had initially wished to retain control of the bank by giving bond investors a minority stake in return for a £500 million loss on their debt.
But the bondholders, which include US hedge funds Aurelius Capital Management and Silver Point Capital, are to take charge of the bank under the new plan, which will see it listed on the stock market next year.
Co-op said its values and ethics will be "legally embedded" in the bank's new rules, allaying concerns among some customers of a transformed approach following the group’s loss of control. The bank has traditionally attracted organisations such as trade unions and charities due to its ethical slant.
Investors must now vote to back the plan, with the Co-op warning that the bank will fall into state hands through the resolution process if they do not, leaving investors empty-handed.
has not been revealed how many of the lender’s 9,000 employees will lose their
jobs as a result of the branch closures.