Two global investment firms have agreed to become significant shareholders in the Co-operative Bank Holdings.
J. C. Flowers & Co and Bain Capital Credit – currently also engaged in a controversial bid to buy insurance mutal LV= – look set to acquire the shares in the business currently held by BlueMountain, with the deal subject to regulatory approval.
BlueMountain currently holds 10.01 per cent of the A shares and 12.05 per cent of the B shares of the Bank.
The Bank was formerly wholly owned by the Co-op Group the financial crisis of 2013 forced its sale. It is now owned by a group of private investment firms but has been allowed to keep its name so long as it maintains its ethical policy and links to the movement by funding initiatives such as the Hive, a business support programme delivered by Co-operatives UK.
The sale prompted the formation of the world’s first union of bank customers, Save Our Bank – a co-op which is monitoring the Bank’s ethical policy and campaigning for its return to co-operative ownership.
Nick Slape, chief executive of the Bank, said of the new deal: “Since we began our turnaround, the backing of our long-term shareholders has enabled us to make significant progress and we are extremely grateful for all the support they have shown.
“We are delighted to welcome J.C. Flowers & Co and Bain Capital Credit and we are pleased that they share our positive view of the future possibilities for our bank.
“This investment builds on the encouraging reception to our £200m debt issuance in November 2020 and is an endorsement of the progress achieved in our five year transformation plan to date, as we anticipate our Bank returning to a position of sustainable profitability from 2021.”
Tim Hanford, head of Europe for J.C. Flowers & Co, added: “We have followed the development of the Co-operative Bank over the last decade and are impressed by the progress that has been made by the management team and board.
“We now look forward to partnering with them to take advantage of some of the opportunities available in this post-Covid UK banking environment.”
Fabio Longo of Bain Capital Credit said: “The Co-operative Bank is truly unique in its ethical positioning, which is backed by a loyal customer base. We look forward to supporting this value proposition to existing and future customers.”
Shaun Fensom, one of the organisers of Save Our Bank, said: “”We’re not sure what the change of investors means for the future of the bank. But it does seem to be an indicator that the bank is being seen as a more. interesting investment now that it is returning to profitability.”
Meanwhile the Bank has issued its first quarter results to 31 March, with a statutory profit before tax of £7.2m and underlying profit of £2.6m.
It reported an increase in mortgage balances of £1bn (6%) with a strong pipeline (£2bn) and growth in core customer deposits. Its CET1 ratio increased by 0.7pp to 19.9% and it reports a strong liquidity position with LCR of 163.3%.