A report in the Telegraph suggests that the Co-operative Group will sell some of its entitlement to the planned rights issue by the bank. The rights issue is designed to raise £400m and there has been doubt that the Group - which has serious financial difficulties - would be able to find £100m+ needed to keep its stake at 30%.
The Kelly review into what went wrong at the bank was published today.
In its response the Co-op Group welcomed the report. Richard Pennycook said: "the management that instigated this disaster for the Group are no longer in place; the flawed governance structure that failed to apply the right checks and balances, however, remains."
News has emerged that the Co-operative Bank has hired David Bagley, last seen when he resigned as HSBC's head of compliance after admitting that HSBC had allowed Mexican drug cartels to launder billions of dollars through its US operation for years. The website Complaince Matters reports:
The Save Our Bank campaign is calling on the Co-op Bank's Chief Executive not to accept the £1.7m bonus he has been promised if the bank's position improves. “The bank needs to take a lead and show that it is different from other banks,” said Shaun Fensom from the Save Our Bank campaign. “It can start by rejecting excessive pay deals.”
Reports in the media say that Lord Myners has resigned from the Co-operative Group board, apparently because of opposition to his proposed reforms of the governance of the Group.
The bank needs another £400m capital
Last week the Co-op Bank announced that unforeseen losses will mean it needs to raise another £400 million in capital on top of the £1.5 billion it raised in the recapitalisation last year.
In reaction to news that the Co-op Bank needs a further capital injection of £400m, The Save Our Bank campaign made the following statement:
Some people dismiss the Save Our Bank plan to raise money from ordinary members to buy back a co-operative majority stake in the bank. They say it's a nice idea but the sums of money involved are too high.