Co-Operative Group cedes control to creditors after 141 years

The Co-Operative Group Ltd has agreed to cede control of its banking unit to creditors after 141 years, part of a deal to allow the lender to plug a £1.5bn (€1.77) capital shortfall.

Co-Operative Group, a mutual whose businesses range from supermarkets to funeral parlours, will keep a 30% stake in the Co-Operative Bank Ltd after reaching an agreement in principal with creditors, chief executive Euan Sutherland said in a statement.

The Manchester-based company will remain the bank’s largest shareholder, he said. The group, which traces its roots to Britain’s 19th century industrial north, had sought to keep control over its banking unit while forcing bondholders to exchange subordinated debt for new equity and senior debt. Bondholders may now seek to find a buyer for the lender, which has 4.7 million customers.