Thousand jobs may go in Co-op Bank rescue bid

Some 1,000 Co-operative Bank workers could face the axe in a major £1.5bn rescue plan for the struggling financial services firm.

The Co-operative Group will announce details on Monday of the plan which will see the mutual hand over about 70 per cent of the bank’s ownership to City investors. Senior officials at the group told The Independent that the recapitalisation plan would involve the bank getting a stock-market listing by Christmas, but refused to confirm the level of job losses, which could hit almost a tenth of the bank’s workforce. The bank developed a £1.5bn black hole from losses in its takeover of Britannia building society and its failed bid for 632 branches of Lloyds Banking Group.

With so-called vulture funds such as Monarch Alternative Capital circling the beleaguered bank, worries have grown that the Co-op’s problems will lead to the mutual being forced to give up its ethical position as the new investors chase larger profits.

But sources inside the bank said the new listed company would keep its ethical stance, pointing out that the Co-op Group would remain the largest single shareholder with 30 per cent. The listed bank will also have a values and ethics committee to maintain its existing ethical focus, which bars it from investing in the likes of the arms trade or human trafficking.

One commentator pointed out that “investors will be attracted by the Bank’s strengths, based around its customer service proposition. The bank and its new investors will have a shared common purpose.”

Crucial to the success of the restructuring is approval from some 12,000 retail bondholders who will be asked to vote in the next few weeks.

In return for approving the move, bondholders are expected to be handed new bonds offering a much lower dividend.