Five questions answered on the Co-op Bank’s plans to cut branches

How many stores is the Co-op Bank planning on closing?

Amid an ongoing struggle to bring the Co-op Bank back into profit it has announced it will close some of its stores by the end of next year. We answer five questions on the Co-op’s branch closure plan.

How many stores is the Co-op Bank planning on closing?

The banking group plans to reduce its branch network by 15 per cent by the end of next year, which means closing around 50 branches.

How will the branch closures affect jobs at the bank? 

In regards to this, Euan Sutherland, group chief executive, told BBC Radio 5 live: "We do need to take the overall costs down, unfortunately [that] will hit jobs, but we don't have the details today."

He added: "We have taken a major step forward towards achieving our plan to secure the future of the bank.”

Why is Co-op closing these branches?

The branch closures are part of a £1.5bn recapitalisation plan rescue deal to bring the bank back into profit.

The rescue deal will see shares of around 70 per cent of the bank handed over to creditors, leaving Co-op Group with 30 per cent.

The Co-operative Group will inject £462m into the bank to retain this 30 per cent equity.

However, investors have to vote in this plan in a vote that will take place before the end of the year. Three quarters of investors must support the plan for it to proceed.

The Co-op also plans to list the bank on the London Stock Exchange in 2014.

What else have decision makers at the Co-op Bank said?

Niall Booker, chief executive of the bank, is reported as saying by The Telegraph:

“You can see by what’s happened to other banks,” he said, naming the Royal Bank of Scotland and Lloyds Banking Group, “that’s it going to take time.”

“One thing we must not forget is the core part of our operation is profitable on an ongoing basis; the drag comes from the run-off portfolio,” he continued.

Finally he added that:  “it’s going to take us four to five years to restructure this bank.”

What has bank regulators the Prudential Regulation Authority said about the Co-op Bank’s new recapitalisation plans?

"We welcome the announcement by the firm today setting out the final details of how it will raise the capital required," it said in a statement.

The banking group plans to reduce its branch network by 15 per cent by the end of next year. Photograph: Getty Images.

Heidi Vella is a features writer for Nridigital.com

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Lord Sainsbury pulls funding from Progress and other political causes

The longstanding Labour donor will no longer fund party political causes. 

Centrist Labour MPs face a funding gap for their ideas after the longstanding Labour donor Lord Sainsbury announced he will stop financing party political causes.

Sainsbury, who served as a New Labour minister and also donated to the Liberal Democrats, is instead concentrating on charitable causes. 

Lord Sainsbury funded the centrist organisation Progress, dubbed the “original Blairite pressure group”, which was founded in mid Nineties and provided the intellectual underpinnings of New Labour.

The former supermarket boss is understood to still fund Policy Network, an international thinktank headed by New Labour veteran Peter Mandelson.

He has also funded the Remain campaign group Britain Stronger in Europe. The latter reinvented itself as Open Britain after the Leave vote, and has campaigned for a softer Brexit. Its supporters include former Lib Dem leader Nick Clegg and Labour's Chuka Umunna, and it now relies on grassroots funding.

Sainsbury said he wished to “hand the baton on to a new generation of donors” who supported progressive politics. 

Progress director Richard Angell said: “Progress is extremely grateful to Lord Sainsbury for the funding he has provided for over two decades. We always knew it would not last forever.”

The organisation has raised a third of its funding target from other donors, but is now appealing for financial support from Labour supporters. Its aims include “stopping a hard-left take over” of the Labour party and “renewing the ideas of the centre-left”. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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