Britain's Co-op Bank agrees £700 million rescue package

[LONDON] Britain's Co-operative Bank said on Wednesday it had agreed a £700 million (S$1.24 billion) financial rescue package with leading investors that will shore up its capital base, ending months of uncertainty about its future.

Investors who own the bank's debt will pump £443 million into recapitalising its bonds and will also help it raise £250 million in fresh equity, the bank said in a statement.

The bank and parent Co-operative Group have agreed terms to separate their respective pension plans, overcoming a stumbling block after months of negotiations with investors as to who would be liable for the members' pensions.

The bank will contribute £100 million over 10 years to its section of the shared pension scheme.

Co-Op Group's holding in the bank will fall to around 1 per cent from 20 per cent, leaving the bank's US-based hedge fund owners in control.

The bank provides banking services to almost 4 million retail and small and medium-sized enterprises.

Britain's Prudential Regulation Authority said in a separate statement it had accepted the plan, but that implementation of it would be subject to further approvals.

REUTERS