Co-op bank won't be healed for at least four years

Niall Booker, chief executive of the Co-operative Bank has said that the bank will take at least four years to get into decent shape. That's if the bank is able to heal at all.

Booker said that the process is going to take some time, pointing at state-backed Lloyds and RBS banks were returning them to good health has taken a lengthy period.

The bank boss felt that the Co-op is in a slightly better predicament than Lloyds, which he said has taken five years to recover.

When questioned on the group's commitment to the bank, group chief executive Euan Sutherland stressed that "we are committeed to the bank, absolutely in any scenario in our control".

That "in our control" qualifier means that Sutherland's words don't provide much comfort. He went to say that "we're offering £1bn to the exchange offer" and he doesn't "know how much more committed we can be".

The exchange offer Sutherland refers to will see a plan that allows "bondholders to reinvest as shareholders in the bank". That offer might not be the appealing opportunity that Sutherland presents it as.

Existing bondholders will be able to trade in their bonds for a lower value combination of bonds and shares. The Co-op management is right to point out that shares have a larger potential upside, but that comes with a greater potential downside.

Sutherland says there is no plan B, and that the £1bn investment is the full financial stretch of the group.