Loss-hit UK bank confident of raising funds
London, April 12, 2014
Britain's loss-making Co-operative Bank said it was confident of raising the extra funds it needs to secure its future, even without the backing of troubled parent the Co-operative Group.
The country's eighth-biggest lender yesterday confirmed it lost £1.3 billion ($2.2 billion) last year and warned it would not make a profit this year or next.
The bank, which fell under the control of bondholders including US hedge funds last December after a £1.5 billion capital shortfall was exposed, said last month it needed to raise another £400 million to cover the cost of past misconduct.
The future of the Co-operative Group, whose activities range from supermarkets to farms, is also in doubt following the resignation on Thursday of independent director Paul Myners, whose plans to reform Britain's biggest mutual had met with resistance from members.
The Co-operative Group, which owns 30 per cent of the bank, has yet to decide whether to take part in its fundraising.
"I'm confident we'll raise the £400m even if the group does not participate. Shareholders are very, very supportive and I really, really think that we're going to get this through the gate," Co-op Bank chief executive Niall Booker said yesterday.
The bank's other major investors, which include hedge funds such as Perry Capital, Beach Point Capital and Silver Point Capital, were not immediately available to comment.
Banking industry sources say they have little choice but to come up with more money or risk losing the £1.2bn they have already put in.
Booker apologised to the bank's 4.7m customers for its troubles, which were exacerbated when former chairman Paul Flowers was arrested last November as part of a probe into the supply of illegal drugs.
"We appreciate that customers and other stakeholders continue to feel angry about how past failings placed the future of the business so seriously at risk. I would like to apologise to them," he said.
Despite the negative publicity, Co-op Bank said the number of customers using it for their main personal current account rose slightly last year.-Reuters