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UK's Co-op Bank agrees rescue plan

UK's Co-op Bank agrees rescue plan
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Britain’s Co-operative Bank has found a way to plug a hole in its balance sheet that is the equivalent of 1.75 billion euros.

Bond holders in the bank will have to swap them for new bonds and shares, that will be listed on the London Stock Exchange. That could mean they lose around 30 percent of the value of their investments. No account holders will lose anything.

The plan means there is no need for a government bailout.

Taxpayer-funded rescues during the crisis of 2008-09, particularly of the much bigger RBS and Lloyds, were highly unpopular with Britons and the authorities have been trying to avoid any more public rescues.

The bank’s troubles stem from its merger with the Britannia building society which led to losses from some of Britannia’s big commercial property loans.

The Co-op Group, Britain’s biggest customer-owned business, which runs supermarkets, funeral services and pharmacies, said it will also provide financial support for its banking unit.

The future of the bank, which has 4.7 million customers, has been in question since Moody’s cut the lender’s credit rating to junk status and warned it might need taxpayer support – something the bank denied.

Its capital position had come under increased scrutiny since it pulled out of a deal to buy hundreds of bank branches from Lloyds Banking Group in April.