LONDON – Co-operative Group, the U.K.’s biggest mutual business, said Monday it had agreed on a revised rescue plan to plug a 1.5 billion-pound ($2.4 billion) hole in its finances.
The ethical lender’s plan will result in the loss at its banking unit of 50 of its 324 branches by the end of 2014. It was not immediately clear how many jobs would be lost.
Group Chief Executive Officer Euan Sutherland said it will retain 30 per cent of the bank and remain its largest shareholder. The bank pledged to retain its ethos, and took out full page advertisements in British newspapers to underscore its commitment to its values.
The company said its values will be “legally embedded” in the new rules that govern the bank. That’s an important point because many of its customers — such as charities — chose it over other institutions because of its values.
“The bank will be what its customers expect of it – a fair, responsible and trusted bank that delivers great service to retail and small business customers, underpinned by the values and ethics of the Co-operative movement,” Sutherland said in a statement.
Shareholders must still approve the plan in the coming weeks.
Worries about Co-op emerged after it backed out of a deal to buy some 630 branches from another U.K. lender, Lloyds Bank. The bank’s problems resulted from poor commercial loans taken on in a merger with the Britannia building society in 2009.