Co-op calls off insurance sale on equity deal

 
Tim Wallace
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THE CO-OPERATIVE group has pulled the plug on its plan to sell its general insurance arm because it no longer needs the funds to fill the bank’s capital hole.

A £1.5bn capital hole was revealed at the bank last summer, and the group initially planned to fill £1bn of that with its own resources.

It planned to sell its life and savings arm as well as the general insurance business to fund the move, while investors in the bank would take a knock of £500m.

Instead those investors negotiated a different deal where they lost more of their bond investments but took a greater share of equity in the bank.

As a result the Co-op Group lost around 70 per cent of the ownership of the bank, but only has to pay in the region of £500m to fill the capital hole.

That means it no longer needs to sell the insurance arm, which is worth in the region of £500m.

“Having considered the sale process, and in light of the changed requirements on us under the bank recapitalisation process, we believe it is in the best interests of our members, customers and colleagues that we retain this strong business and develop it further,” said group chief Euan Sutherland.