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ETHICAL Co-op Bank customers had further cause to fret yesterday as its boss’s latest scheme threatened to hand the firm outright to City profiteers.
Shareholders and customers were promised “a very solid future” in May of last year when then-chief executive Euan Sutherland announced an unprecedented entry into the stock market in order to plug a £1.5bn deficit.
But nearly a year on, the 142-year-old institution could be about to lose its ethical investment statutes entirely under the terms of a further £400m share drive.
The Co-operative Group now owns just 30 per cent of its banking arm as a result of last year’s flotation on the stock market.
But the mutual revealed in a statement yesterday that it would not seek even to retain its current percentage stake following a new share sale this week.
“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,” it said.
“The group remains supportive of the Bank and its strategy.”
It is unknown as yet what percentage the mutual will continue to hold.
But if its stake falls below 20 per cent, the bank’s board will have the option of tearing up a guarantee to uphold ethical cooperative values.
Member Michael McGowan of the Co-operative Group’s Leeds and Wakefield area committee said the bank was simply “no longer a co-operative.”
He said: “The decision increases the influence of hedge funds whose job is to make a profit for private shareholders.
“It further weakens the bank as an ethical business as its co-operative ownership is reduced further.”