Co-op Bank 'confident' it can raise £400m fresh capital without Group's participation
Friday 11 April 2014
The boss of the Co-op Bank insisted “confident” that it can raise the £400 million of fresh capital it needs from shareholders, even if Co-operative Group does not stump up its £120 million share of the rights issue.
The fund-raising, announced last month, follows last year’s £1.5 billion refinancing, which saw hedge funds and institutional bondholders wrest 70% of the bank from the group.
Today the bank said if it did not get the extra cash it would breach regulator capital rules.
Niall Booker, chief executive of Co-op Bank, said: “We are confident that we will raise that £400 million even if the Co-op Group does not participate. They, and the majority of our shareholders, are supportive of both the quantum and the need to raise this capital. I spoke to Richard Pennycook [acting chief executive of Co-op Group] as recently as yesterday.”
Co-op Group, which has been rocked by the resignation of its chief executive, Euan Sutherland, and senior director, Lord Myners, still owes the bank £263 million from the first bail-out, which Booker said it was “contractually obliged” to pay, and could choose to take up all, part or none of its share of the rights issue. That could cut its current 30% stake further.
The bank today said it lost £1.3 billion last year which included bad debt write-offs largely from its takeover of the Britannia of £516 million, mis-selling and legal costs of £412 million, and IT write downs of £148 million. On top of that, costs and tax charges for coming out of Co-op Group were £96 million.
Booker, formerly of HSBC, could earn up to £2.9 million in pay and share awards for last year since he joined in June, and up to £5.8 million for the 18 months to the end of this year. He said he expected to hand over as chief executive “once the bank is stabilised”. He added: “At that stage it will not require the cost base of the individuals, not including myself, with the necessary skill base currently needed to manage it.”
Chairman Richard Pym said: “I recognise that for many customers and colleagues the levels of remuneration being discussed will cause concern, but it is important to remember that the state the bank is in has nothing to do with the present management team.
“They were brought in to keep the bank alive and turn the business around over the longer term; they are therefore not being paid for past failures.”
The bank said it will claw back £5 million in bonuses and deferred share awards from former directors and executives, including £95,000 promised to former chairman Paul Flowers, who was subsequently accused of drug offences.
It also said a planned flotation on the stock market was likely to be delayed because of the large number of investigations being held into its past.
- 1 This 'woman calls police to order pizza' story isn't going where you're expecting
- 2 Axe wielding man shot dead after attacking four New York policemen on busy street
- 3 Watch what happened when food critics were unknowingly served McDonald's
- 4 Jimmy Carr's Oscar Pistorius joke goes a bit too far at the Q Awards
- 5 Ottawa shootings: Bruce MacKinnon's cartoon is the perfect tribute to soldier Nathan Cirillo
Renee Zellweger on plastic surgery rumours: 'I'm living a more fulfilling life and I'm thrilled that perhaps it shows'
FCKH8: YouTube reinstates provocative anti-sexism video showing young girls swearing
Axe wielding man shot dead after attacking four New York policemen on busy street
This 'woman calls police to order pizza' story isn't going where you're expecting
McKamey Manor: This 'extreme' haunted house is the stuff of nightmares
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Attacks on 'Ukip Calypso' show how skewed people’s priorities are
Poppy Appeal 2014: This is why I won't be wearing a red poppy this year
iJobs Money & Business
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...