Five questions answered on the Co-op's new rescue deal

The bid to plug a £1.5bn gap.

The Co-operative Bank has unveiled a new deal to fill a £1.5 bn gap in its finances. We answer five questions on the deal.

What does the deal consist of?
The deal consists of a "bail in" deal, whereby bond holders will be offered shares in the bank. It will also result in a stock market listing of the bank on the London Stock Exchange.

What does this mean essentially?

It ultimately means that the investors and the group make a joint contribution to the recapitalisation of the bank.

It also means that in the short term bond holders will lose out. However, eventually they will be able to exchange their bonds for shares gaining a minority stake in the bank, which will allow them to benefit from the eventual upside of the bank.

The bank said the number of shares and bonds offered in exchange for current holdings would be finalised in October, when its offer will be launched officially.

How many investors will actually be affected by the plan?

Seven thousand retail investors who own permanent-interest bearing shares (Pibs), which pay dividends of between 5.5% and 13% a year, will be affected by the plan.

If the bank is being listed on the stock exchange, does this mean the bank has changed its original ethos?

Chief executive Euan Sutherlandm, speaking to the BBC, said this was not the case.

"We have always been a PLC [public limited company] wholly owned by the Co-operative Group. The majority of the bank will still be owned by the Co-operative Group. There will be no change to our ethos or the way we run our bank," he told the BBC.

Is the Co-operative group also contributing to the rescue plan?

Yes. The Co-operative group will provide extra capital.

The bank also said it had also approved the plan in full with the banking industry’s new regulator the Prudential Regulation Authority.

Photograph: Getty Images

Heidi Vella is a features writer for Nridigital.com

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In your 30s? You missed out on £26,000 and you're not even protesting

The 1980s kids seem resigned to their fate - for now. 

Imagine you’re in your thirties, and you’re renting in a shared house, on roughly the same pay you earned five years ago. Now imagine you have a friend, also in their thirties. This friend owns their own home, gets pay rises every year and has a more generous pension to beat. In fact, they are twice as rich as you. 

When you try to talk about how worried you are about your financial situation, the friend shrugs and says: “I was in that situation too.”

Un-friend, right? But this is, in fact, reality. A study from the Institute for Fiscal Studies found that Brits in their early thirties have a median wealth of £27,000. But ten years ago, a thirty something had £53,000. In other words, that unbearable friend is just someone exactly the same as you, who is now in their forties. 

Not only do Brits born in the early 1980s have half the wealth they would have had if they were born in the 1970s, but they are the first generation to be in this position since World War II.  According to the IFS study, each cohort has got progressively richer. But then, just as the 1980s kids were reaching adulthood, a couple of things happened at once.

House prices raced ahead of wages. Employers made pensions less generous. And, at the crucial point that the 1980s kids were finding their feet in the jobs market, the recession struck. The 1980s kids didn’t manage to buy homes in time to take advantage of low mortgage rates. Instead, they are stuck paying increasing amounts of rent. 

If the wealth distribution between someone in their 30s and someone in their 40s is stark, this is only the starting point in intergenerational inequality. The IFS expects pensioners’ incomes to race ahead of workers in the coming decade. 

So why, given this unprecedented reversal in fortunes, are Brits in their early thirties not marching in the streets? Why are they not burning tyres outside the Treasury while shouting: “Give us out £26k back?” 

The obvious fact that no one is going to be protesting their granny’s good fortune aside, it seems one reason for the 1980s kids’ resignation is they are still in denial. One thirty something wrote to The Staggers that the idea of being able to buy a house had become too abstract to worry about. Instead:

“You just try and get through this month and then worry about next month, which is probably self-defeating, but I think it's quite tough to get in the mindset that you're going to put something by so maybe in 10 years you can buy a shoebox a two-hour train ride from where you actually want to be.”

Another reflected that “people keep saying ‘something will turn up’”.

The Staggers turned to our resident thirty something, Yo Zushi, for his thoughts. He agreed with the IFS analysis that the recession mattered:

"We were spoiled by an artificially inflated balloon of cheap credit and growing up was something you did… later. Then the crash came in 2007-2008, and it became something we couldn’t afford to do. 

I would have got round to becoming comfortably off, I tell myself, had I been given another ten years of amoral capitalist boom to do so. Many of those who were born in the early 1970s drifted along, took a nap and woke up in possession of a house, all mod cons and a decent-paying job. But we slightly younger Gen X-ers followed in their slipstream and somehow fell off the edge. Oh well. "

Will the inertia of the1980s kids last? Perhaps – but Zushi sees in the support for Jeremy Corbyn, a swell of feeling at last. “Our lack of access to the life we were promised in our teens has woken many of us up to why things suck. That’s a good thing. 

“And now we have Corbyn to help sort it all out. That’s not meant sarcastically – I really think he’ll do it.”