The Co-op Group looks set to see its 30 per cent stake in the Co-op Bank fall as it announces the bank chairman Richard Pym will step down by the end of year.
The bank announced in March it needed to raise an additional £400m in capital for redress for a wide range of failings including missold payment protection insurance and interest rate swaps and widespread mortgage failings.
Co-op Bank chief executive Niall Booker says the bank’s five largest shareholders back the move to reduce the Co-op Group’s stake and that four major shareholders have already committed to buying 31 per cent of the shares available.
He says: “If successful, the additional capital to be raised through this transaction will enable us to reset our starting capital position for the execution of our business plan to return to our roots as a bank focused on our retail and SME customers with values and ethics at the heart of our business.”
The announcement comes days after Lord Myners’ report into the Co-operative Group’s corporate governance described the board as “dysfunctional”, warning that without it being reformed the Group may not survive.
Last year the Co-op Bank revealed it had a capital shortfall, prompted a rescue deal which saw Co-op Group cede control of the bank to bondholders, mainly hedge funds.