J.C. Flowers, Bain Capital Credit to buy into recovering Co-Op Bank By Reuters

By Simon Jessop

LONDON (Reuters) -The Co-Operative Bank said on Wednesday that J.C. Flowers and Bain Capital Credit had agreed to buy a minority stake in the company from an existing investor, alongside a trading update that showed the lender’s turnaround was ahead of schedule.

The two buyout groups were set to buy the 10.01% of the company’s A shares and 12.05% of the B shares currently owned by BlueMountain, Co-Op Bank said in a statement, without giving financial details.

The deal remains subject to regulatory clearance.

Along with smaller peers, the challenger bank has struggled to dent the market dominance of the UK’s leading lenders, hit by low interest rates and the impact of COVID-19, leading some analysts to expect further consolidation in the sector.

Loss-making heading into the pandemic, the lender announced job losses and branch closures last year as it sought to stabilise the business, something Chief Executive Nick Slape said was now bearing fruit.

The bank had made a pretax profit of 7.2 million pounds in the three months to end-March and the lender’s restructuring plan was ahead of schedule, it said in a separate trading update.

Slape, who was appointed CEO last year, added that he expects the bank to return to “sustainable profitability” from 2021.

“At the half-year we will have reached the midpoint of our turnaround strategy and we are ahead of where we expected to be,” Slape said.