Two hedge funds have forced the U.K.'s troubled Co-operative Group to give up control of its banking business.
Aurelius Capital Management and Silver Point Capital, major creditors of the Co-op Bank, have agreed to double their cash infusion into the bank to £1 billion, but their price is a steep one. Co-op will see its stake in the bank drop to 30% when it is listed later this year; the firm had hoped to retain 75% of the bank.
Co-op is seeking to avoid nationalization through the deal with the hedge funds.
"This is the first bank to be rescued and to survive as a standalone entity without taxpayer money," CEO Euan Sutherland said. But the circumstances of that survival has many worried, including labor leader Dominic Hook.
"This is dreadful for the staff, customers and the wider banking industry," the Unite union's national officer said. "This may mean customers will have even less choice on the high street and means we will have yet another finance company seeking shareholder returns over better banking."
Co-op, which was founded in 1844, is currently customer-owned.