As the bank confirmed it would raise the money, partly needed to pay for past misconduct such as mis-selling of payment protection insurance (PPI), it also announced that the chairman brought in to secure its future would be leaving earlier than expected.
But the wider group, which owns 30% of the bank while struggling under its own pounds 1.4bn of debt, declined to put up any new money for the bank capital raising. It will instead sell some of its stake to raise the cash to take part.
The exact size of its stake will not be known until the fundraising is completed, but it is thought to be expecting to retain more than 20%. However, if it fell below that threshold the bank would have to renegotiate key agreements, including its use of the Co-op brand.
"In the court of public opinion the Co-op bank brand becomes less and less credible as the amount of
"The question will come when the bank does something that appears . . . not to be in tune with the ethical values of the
The group 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."
The Co-op bank said four of its other biggest shareholders had committed to taking up 31% of the new shares.
"We have the support of our five largest shareholders for this transaction," the bank's chief executive,
In the prospectus for the share sale, the bank warned that its outlook remained challenging and that bad publicity could lose it customers and deposits.
The Co-op bank was regarded as one of the jewels in the mutual organisation's array of businesses, which also spans funeral parlours, pharmacies and food stores. The bank was hailed for its ethical policies and supposedly low-risk behaviour when the industry was in crisis.
The group owned the bank outright before it was thrown into turmoil last year when its bid to buy hundreds of branches from
In the subsequent pounds 1.5bn rescue the bank's creditors took control of 70%, but within months the new management revealed that it needed more money to pay compensation for mis-selling of PPI and other bad practice as well as the cost of separating from the
Despite the further reduction of the group's stake, the bank intends to keep the Co-op brand. This is because the group enshrined ethical policies in the bank's constitution before selling any of its holding, a spokesman said. He said the bank's stance, which includes not investing in arms or tobacco, appeals to socially conscious customers and makes it a distinctive investment for hedge funds.
Booker, who joined last June, said: "I remain extremely grateful for the continuing support and loyalty of our customers and shareholders and would like to reassure them that the completion of this capital raising will assist the new management team in the implementation of the business plan that aims to return the bank to health over time."
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