Virgin Money walks away from Co-op Bank takeover talks
Virgin Money has withdrawn from a potential takeover of the UK’s Co-op Bank as the struggling lender prioritises talks with a group of hedge funds about a financial restructuring, according to Sky News.
As Banking Technology reported in February, the Co-op Bank was put up for sale – with the minority investor Co-op Group saying it is “supportive of the plan to find the bank a new home”. Also, back in January, Virgin Money announced its plans to launch a digital bank – VMDB.
According to Sky News, it has learnt that the high street lender backed by (non-enigmatic) Sir Richard Branson informed the Co-op Bank in recent days that they were terminating discussions about a formal offer for it.
Sky News says the move “further increases the likelihood that the Co-op Bank will be recapitalised by either its existing bondholders or new investors, rather than being acquired through a conventional takeover.
“Virgin Money had been seen as the most likely bidder for the Co-op Bank, but the prospects had diminished in recent weeks with the latter’s decision to hire advisers to work on a debt restructuring.”
In March, the Co-op Bank said it would require between £700-£750 million of new top-quality capital, the “majority of which would be generated by exchanging some of its debt securities for equity”. The remainder – between £250-£300 million – would come from issuing new shares.
The Co-op Bank and Virgin Money both declined to comment.