The future of all four Co-op Bank branches in Scotland is uncertain after the owner said yesterday about 50 sites throughout the UK were to shut.
Co-operative Group, whose activities cover food retailing, financial and legal services, travel, healthcare, funerals and farms, announced the closures as part of a revised rescue plan for its banking arm.
Control of the Co-operative Bank is to be handed over to a group of investors, including US hedge funds Aurelius Capital Management and Silver Point Capital, who will get a 70% stake after buying bonds.
Co-op Group said it would axe about 15% of its bank branch network, without revealing how many jobs will go among the lender’s 9,000 staff.
But group chief executive Euan Sutherland warned there would be “significant” job losses. The company also aims to slash costs across its financial service call centres, while investing in digital and self-service banking.
In Scotland, Co-op Bank has two branches in Glasgow and one each in Aberdeen and Edinburgh.
A spokeswoman for the business said it employed fewer than 50 people north of the border.
Co-op Group had initially hoped to retain control of the ethical lender by giving bond investors a minority stake in return for a £500million loss on their debt.
Its revised rescue plan aims to plug a £1.5billion black hole in the bank’s finances caused by the purchase of the Britannia Building Society and aborted plans to buy hundreds of Lloyds Bank branches.
The bank has traditionally attracted organisations like trade unions and charities because of its ethical approach, and the Co-op’s loss of control has raised concerns among some customers.
A stock market listing is expected next year, with Co-op Group promising that its values and ethics will be “legally embedded” in the lender’s new rules.
Investors must now vote to back the rescue plan and the group warned that the bank will fall into state hands through the resolution process if they do not, leaving investors empty-handed.
It said the plan had been backed by the Financial Conduct Authority and Prudential Regulation Authority, who are demanding it finds £1.5billion of capital as a crisis buffer.
Co-op Group will contribute about £462million to the bank’s turnaround, including £129million being handed to retail investors, £333million in cash and £40million in forecast interest savings.