Co-op loses most of its bank

The chief executive of the Co-operative Group, Euan Sutherland, has confirmed that the mutual organisation will lose overall control of the Co-operative Bank as a result of a rescue deal.

The Co-op has been negotiating with big investors, led by US hedge funds, to provide extra capital for its bank, without having to turn to the taxpayer for a bail out or leave small investors nursing serious losses.

It hatched a plan in June under which it would retain control, but the hedge funds have stood in the way, seeking to take ownership of Cooperative Bank themselves.

Today Mr Sutherland conceded in a statement that the Group would be left with just 30 per cent of the bank, though he argued that he would keep "effective control" because no other shareholder would own a larger stake.

He said there was agreement in principle on the deal and more details would be released in the coming days.