The Co-operative Bank today launched a crucial £400 million fundraising as it revealed chairman Richard Pym is to stand down by the end of the year.
The lender had faced near-collapse last year after the discovery of a £1.5 billion hole in its balance sheet. It had to be rescued by bondholders in a move that saw former parent Co-operative Group’s stake reduced to 30 per cent.
Subject to shareholder approval, the bank plans to issue 200 million new shares at 200p each. Four major shareholders have pledged to take up 31 per cent of the total, while the Co-op Group will also participate and vote in favour of the move.
Niall Booker, the bank’s chief executive, said: “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.”
Booker said the lender’s board will carry out a “full and rigorous” process to find a replacement for Pym, who has been chairman for less than a year. The former Alliance & Leicester chief executive was appointed to succeed Paul Flowers.
A spokesman for the Co-op Group, which last month unveiled annual losses of £2.5bn, said: “While the size of the group’s shareholding will be reduced following the capital raising, we will retain a significant stake and expect to remain the single largest shareholder. The group remains supportive of the bank and its strategy.”