Co-op Bank discontinues sale process amid rescue deal hopes

Co-op Bank discontinues sale process amid rescue deal hopes

Co-op Bank discontinues sale process amid rescue deal hopes

Existing investors in the bank include several US hedge funds such as Cyrus Capital Partners, GoldenTree Asset Management, Silver Point Capital and Blue Mountain.

The lender said that given the advanced nature of the talks it had chose to discontinue a formal sale process.

On June 19, the bank had confirmed media speculation and said "it is in advanced discussions with a group of existing investors with a view to a prospective equity capital raise and liability management exercise".

The Co-operative Bank says the extra capital would let the bank meet its long-term capital requirements and mean a sale is unnecessary.

The bank had put itself up for sale in February, inviting offers for 100% of the share capital.

Co-op said it was discussing its capital raising options with the UK's Prudential Regulation Authority.

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The bank doesn't expect to pay a dividend until at least 2021, a year later than previously envisaged, while there has also been an increase in the costs of the capital raise process, the company said.

As a result, the loss-making lender is now majority controlled by USA hedge funds.

It is understood that the Co-op Group - the Bank's former sole shareholder - has ruled out providing new funds to the joint pension scheme to help terminate the long-standing reciprocal guarantee deal between them.

Last week, the beleaguered lender revealed it was in negotiations with a group of existing investors, over a possible sale.

Earlier this year, the bank reported its fifth annual loss in a row, although the £477m deficit for 2016 was an improvement on the £610m loss recorded a year earlier.

A spokesperson for Co-op Bank told the Sun Online that "it is very much business as usual for customers of the bank".

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