LONDON Britain's Co-operative Bank has raised 1 billion pounds ($1.6 billion) from a restructuring of its debt and ownership structure, the cornerstone of a 1.5 billion pound recapitalisation due to complete next year.
Co-op Group and Co-op Bank said in a joint statement that the so-called liability management exercise was successfully completed on Friday.
Co-op Bank plans to top that up with 333 million pounds contributed from Co-op Group, 125 million pounds from its bondholders and 40 million pounds of interest savings to reach its 1.5 billion pound target.
Under the scheme, Co-op Group has ceded control of its troubled banking arm to hedge funds and other bondholders, seeing its ownership fall to 30 percent from 100 percent.
The Co-op, whose businesses also include food shops and funeral services, has been rocked this year by a capital shortfall at its bank and the arrest of former bank chairman Paul Flowers as part of an investigation into the supply of illegal drugs.
"Today we have taken a major step forward in securing the future of The Co-operative Bank, with the support of our investors," Euan Sutherland, chief executive of Co-op Group, said in a statement.
($1 = 0.6114 British pounds)
(Reporting by Steve Slater; Editing by Mark Potter)