Co-op removes four bank directors
Ailing lender Co-operative Bank has taken another step towards a stock market flotation by removing four directors from its board.
The bank said non-executive directors Duncan Bowdler, Peter Harvey, Bob Newton and Len Wardle will stand down but remain on the board of the financial services arm of the wider funerals-to-supermarkets Co-op Group.
The lender is attempting to plug a £1.5 billion black hole in its balance sheet through a painful fundraising which will force losses onto owners of its bonds and leave it with a stock market listing - ending its prized mutual status.
It said the boardroom departures will increase its independence ahead of the capital raise, after hedge funds controlling a large slice of its bonds complained of a conflict of interest between the bank and the wider Co-op group.
Hedge funds represented by investment bank Moelis & Co have also demanded the bank tear up its rescue plan, instead proposing an alternative plan of converting all its bonds into shares, giving it a bigger stake in the lender.
The wider Co-op Group has insisted there is ''no plan B'' to saving the bank, which slumped to £709.4 million losses in the first six months of the year.
But last month the bank set up an independent committee to consider the alternative proposals.
Mr Bowdler is a Co-op employee who works on trading legislation, while Mr Harvey is a banking professional who spent more than three decades at Barclays.
Mr Newton is an insurance professional who has worked at firms including Aviva and NFU Mutual. Mr Wardle is chairman of the wider Co-op Group, and was appointed in 2007.
Today the bank said it is also recruiting three more independent non-executive directors and will add another Co-op Group representative to its board to comply with the corporate governance code.
The Co-op Bank hopes to finalise details of its capital boost by the end of the month, after regulators ruled it needs a bigger buffer to protect it against future financial crises.
Under its capital plan, dubbed an exchange offer, the Co-op Group will contribute £1 billion, while bondholders will weigh in with another £500 million by losing out on the value of their debt.
The bank's woes have been blamed on soured corporate loans, many of which were acquired with its takeover of Britannia Building Society in 2009.
The bank has 4.7 million customers and employs about 10,000 staff.