Co-op sells last 1% of its bank

Co-op sells last 1% of its bank

The Co-operative Group has sold its last 1% stake in the bank which bears its name four years after it virtually collapsed and had to be bailed out by American hedge funds.

The sale of the last few shares, valued at £5 million, came as the group reported a 48% fall in interim profits after their insurance business fell into loss.

Stripped

After 145 years the troubled mutual now has no connection at all with the bank that bears its name and there have been calls for it to be stripped of its title because it is no longer a co-operative mutual venture.

Labour MP John Mann, a member of the Treasury Select Committee, said if the name remained the same it would be masquerading as a worker owned business when, in fact, it is now owned entirely by American-based hedge funds.

Principle

He said: “This sale goes completely against the principle of a true co-operative.”

But the bank claims it still has the right to use the Co-op brand, saying: “Co-operative ethics and values are embedded in the constitution of the bank.”

No influence

Co-op Group chief executive, Steve Murrells, said ties with the bank had been severed because “The group was left with no influence on the business. Selling it gives us an opportunity to focus on our core businesses.”

He added that a name change was not a decision for the Co-op and would need to be taken by either the Financial Conduct Authority (FCA) or Business Secretary Greg Clark.

Problems

The bank’s problems began back in in 2013 when a plan to buy the newly created TSB branches from Lloyds had to be shelved when a £1.5 billion hole was found in the bank’s balance sheet.

Facing collapse, it was bailed out by a group of American hedge funds who were already investors in the bank.

For sale

The move left Co-op Group with a 20% stake in the business which it held until earlier this year when further financial problems led it to put itself up for sale or risk going into special measures with the Prudential Regulation Authority (PRA).

The hedge funds came to the rescue again and provided the £700 million the bank needed to solve its problem, but the group’s stake was reduced to just 1% of shares.