Co-op bank prepares to sell renewable lending division
The Co-operative Bank is preparing to sell off its renewable energy lending division as part of the restructuring process amid concerns over debt-piling.
The bank, which is currently undergoing a refinancing deal in an attempt to plug the £1.5billion black hole in its balance sheet, said in a statement that it would be selling its Renewable Energy and Asset Finance (REAF) portfolio, which is worth around half a billion pounds.
The portfolio lends predominantly to financing wind farms, but has also seen lending to projects such as hydro, heat and power.
In a statement, a spokesperson for the Co-operative Banking Group said, “The REAF portfolio has low yields and approximately a third of its projects are still in the development phase.
“A portfolio sale is deemed to be the optimum exit strategy for these assets. This will take the form of a standalone renewable business through a fund structure which may include REAF staff in the on-going management.”
It was also announced on Saturday that the Co-operative Group, which owns the bank, would not be paying dividends to its members this year, instead offering 10% off coupons within its retail sector.
The bank was recently recapitalised in a bid to save it without having to turn to the taxpayer, but with the Co-operative Group retaining 30% of the share, some have voiced concerns as to whether the bank can remain ethical.
Euan Sutherland, CEO of the Co-operative Group, pledged that the bank would stand by its ethical principles, which he says will be embedded into the constitution.
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