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.