As reported earlier, the Co-op Bank has unveiled a £1.5bn bail-in plan to cover its capital shortfall. As part of the plan, which involves a listing on the London Short Exchange for the Co-op Bank (separate from the Co-op group), the bank loses its mutual status.
Mutual finance fans praise the willingness of the institutions to lend, in excess of what would be expected from a more traditional bank. The move could see the Co-op tighten up lending further, having already stopped lending to new corporate clients.
Those banking with the Co-op won't lose out directly unless their account balance exceeds £80,000 as a result of guarantees. Around 6,000 customers could incur losses.
The loss of mutual status and damage to larger depositors could cause the already troubled bank greater problems.