Co-operative Bank 'considered resolution process'

12 July 2013

The Co-operative Bank considered placing itself in the Bank of England's resolution procedure.

Earlier in 2013 the Co-operative Group was told to raise £1.5 billion in capital to close a gap in its bank's financial balance and putting itself in the official resolution process was deemed an option.

However, it decided against turning to the Bank of England's policy as it could have done damage to the brand, BBC News reports.

The current plan to raise two-thirds of the capital will see owners of the institution's debt and preference shares take a hit.

Banks are required to hold this amount of capital to protect savers and depositors from footing the bill in times of crisis.

The Co-operative Bank was set to acquire Lloyds' branches but pulled out earlier in 2013, citing the poor economic climate as the reason. This was before the gap in capital was revealed.

Regulators are keen for institutions to have a foundation of capital in order to avoid the need for massive bailouts seen all over the eurozone in recent years.

By Asim Shah

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