Private equity firm Cerberus pulls out of deal to buy Co-op Bank

A TAKEOVER of Co- op Bank is no longer on the cards after talks with US private equity giant Cerberus collapsed.

The Manchester-based lender, which has been in recovery mode since 2013 when staff found a £1.5bn hole in its balance sheet, said discussions were off but did not give a reason. An insider said the talks were preliminary and disclosed earlier than usual. Co-op Bank has struggled to revive its fortunes since its near-collapse in 2013, the same year that chairman Paul Flowers, the ex-Methodist minister given the moniker the “Crystal Methodist”, quit in the wake of an explosive drugs scandal.

Attempts to revive its fortunes have been slow moving and progress has been hampered by the pandemic. The bank’s owners reportedly hired Goldman Sachs to sound out buyers a year ago. Its discussions with Cerberus emerged only last month, when the bank announced that it had kicked off talks with a mystery buyer.

It is not the first time Cerberus has shown an interest in the lender. It considered snapping up the business in 2017, but the bank failed to find a buyer and instead agreed a £700m rescue deal with its US hedge fund owners, a plan that meant it cut historic ties with the wider Co-operative Group.

The American investor’s interest this time round raised concerns among some MPS as it was accused in 2018 of misleading the Government on a deal to buy £13bn worth of mortgages from Northern Rock. Cerberus has denied claims that it did anything wrong.

A spokesman for Cerberus declined to comment.