Co-op bank up for sale amid concerns over meeting new rules
- Author: Julie Sanders Feb 14, 2017,
Feb 14, 2017, 7:22
The bank has met its pillar one regulatory capital requirements continuously since 2014 and expects to continue to do so.
The troubled Co-op Bank has announced that it is putting itself up for sale while warning it is set to make another annual loss.
Having nearly collapsed in 2013, the bank, part-owned by the Co-operative Group, failed to find its feet and strengthen its finances due to low interest rates.
A spokesperson for the bank told Insurance Age that the insurance division, which is owned by the Co-operative Group, is separate from the bank and will continue to be owned by the group.
The bank almost collapsed in 2013 when it discovered a £1.5bn black hole in its finances, in a year that coincided with chairman Paul Flowers being arrested for alleged class A drug offences.
The bank hoisted the For Sale sign amid concerns over whether it could meet strict new capital rules.
The Bank of England's Prudential Regulation Authority said it welcomed the bank's actions. "The bank's ethical heritage and customer proposition will be a central consideration in this", added Holt.
The news came on the same day that the Bank put itself up for sale as it struggles to come to terms with a combination of a low-interest rate environment and dated IT infrastructure. The board has engaged BofA Merrill Lynch and UBS Investment Bank for both of these activities.
The bank confirmed it will post a "significant" loss for the year to December 31, though the bank's chairman said it remained confident of meeting its capital requirements.
"We will continue to assess the bank's progress in building greater financial resilience over the coming months", the PRA said in a statement.
"We do not, of course, know what the buyer of the Co-operative Bank will look like, but hope the bank will be able to find a buyer that retains its co-operative ethical values".
The bank said it is also considering options other than a sale to build capital, including raising cash from new and existing investors. This meant not investing in fossil fuel extraction, the arms trade, genetic engineering and other "non-ethical" sectors.
"Our goal is to ensure the continued provision of the type of co-operative banking products our members want".