Co-op Bank wins retail investor approval for rescue
Retail bondholders of Britain's Co-operative Bank have voted in favour of a restructuring to rescue the bank and proceed with its plan to fill a 1.5-billion-pound ($2.5-billion) hole in its capital.
Co-op Bank and its customer-owned parent the Co-operative Group said results from an early participation vote that closed on Friday showed more than the required two-thirds of investors submitted their forms and of those, 99.9 percent supported the plan.
The bank has been rocked after its former chairman Paul Flowers was arrested as part of an investigation into the supply of illegal drugs. It said this week that had damaged its reputation and it had lost customers.
The bank had been forced to raise cash after being hit by big losses following its takeover of Britannia Building Society and technology system problems. It was the first vote by investors to proceed with its rescue, and more will follow. If successful, as expected, hedge fund bondholders will end up with a 70 percent stake in the bank and the holding of the Co-operative Group will fall to 30 percent.
"We are now highly confident that our 1.5-billion-pound recapitalisation plan for The Co-operative Bank can be achieved," it said in a statement.