It’s more upheaval for the beleaguered Co-op Bank.
The lender’s announced this morning that it’s looking to raise more than £400m by the end of 2014, in a bid to bolster its finances.
It's also confirmed that its chairman, Richard Pym, will step down by the end of the year, after holding the position since last summer.
The £400m will be raised through the issuing of 200m new ordinary shares, priced at £2 each.
Four of its major shareholders have agreed to take up 31 per cent of the offering, it added.
Parent company Co-op Group will take part in the fundraising, but will see its stake in its banking unit will fall to around 20 per cent.
The group currently holds a 30 per cent stake, after handing over 70 per cent ownership to hedge funds and other bondholders last year, in an attempt to plug a £1.5bn capital hole.
Last year, the bank made a record loss of £1.3bn; the group lost £2.5bn.
Questions have been raised as to whether the group's shrinking stake will affect the bank's use of the the Co-op name.
The Co-op Group said this morning:
While the size of the Group’s shareholding will be reduced following the capital raising, we will retain a significant stake and expect to remain the single largest shareholder. The Group remains supportive of the Bank and its strategy.
The bank said the capital raising will allow it, in the long-term, to operate a CET 1 capital ratio above the seven per cent minimum regulatory level. CET 1 capital, which is the kind it's raising, is a type banks and financial institutions are required to have to help absorb losses when they’re in financial distress.
Chief executive Niall Booker said the lender's got the support of its five largest shareholders for the transaction. He commented:
The business plan is being implemented and there have been some encouraging early signs. We have started to simplify the business, reduce costs and de-risk the non-core assets, while remaining committed to the values and ethics that continue to set us apart.