The American investors which control the Co-operative Bank are lining up their first board nominees weeks after talks about a sale of the self-styled ethical lender were abandoned.
Sky News has learnt that the syndicate of hedge funds, which includes GoldenTree Asset Management, are finalising the appointment of two heavyweight City figures as non-executive directors of the company.
City sources said on Sunday that Sebastian Grigg, a former Credit Suisse banker who advised the government during the 2008 financial crisis, and Richard Slimmon, a partner at the independent advisory firm Gleacher Shacklock, were likely to be appointed as soon as this week.
The decision to install them is said to have been taken by the hedge funds to help ensure that the Co-operative Bank is well-placed to participate in a looming round of UK bank consolidation.
TSB, which is owned by the Spanish group Sabadell, and Sainsbury’s Bank are two of the British lenders which are expected to change hands in the coming months.
The Co-operative Bank, which has retained a surprisingly resilient customer base despite a torrid decade during which it twice came close to collapse, recently received a takeover approach from Cerberus Capital Management.
Its shareholders rejected the bid, which is understood to have been pitched as low as £200m, according to insiders.
The investors, which also include BlueMountain Capital and Silver Point Capital, are now keen to evaluate their options for the Co-operative Bank’s future.
The lender, which is racing to cut costs, still has 3.3m personal banking customers across the UK, making it an important yet sub-scale player in the country’s banking sector.
Nick Slape was recently appointed as the Co-operative Bank’s sixth chief executive in a decade, and has already overseen a successful effort to issue £200m of loss-absorbing capital.
The bank also has a relatively new finance chief, while chairman Bob Dench has been in place since 2018.
Its potential role in UK bank consolidation would come after a turbulent period in which it almost disappeared from the industry landscape altogether.
In 2013, it almost collapsed after trying to buy more than 630 branches from Lloyds Banking Group, only to discover a £1.5bn hole in its finances that had to be plugged by the hedge funds and the Co-op Group.
Subsequent investigations by the Treasury Select Committee and the City watchdog exposed a string of failings in management, corporate governance and regulatory supervision – including, infamously, the exposure of its chairman Paul Flowers’ private life, which led to him being dubbed “the crystal methodist”.
Four years later, it was forced to turn to its owners again for £700m in new funding that saw retail investors swallowing heavy losses.
The Co-op Group subsequently sold its 20% stake in the bank.
A Co-operative Bank spokesman declined to comment on Sunday.