Britain’s Co-operative Group has agreed a plan to plug a £1.5 billion (€1.76 billion) capital hole at its bank which forces bondholders to pay part of the bill, avoiding a repeat of the taxpayer-funded bailouts staged during the financial crisis.

Using a “bail-in” model, bondholders must swap their debt for new bonds and equity in the bank to be listed on the London Stock Exchange, while the Co-op Group, Britain’s biggest customer-owned business, will also provide financial support for its banking unit, the Co-op said yesterday.

The future of the bank, which has 4.7 million customers, has been in question since Moody’s cut the lender’s credit rating to junk status. Its capital position had come under scrutiny since it pulled out of a deal to buy hundreds of bank branches from Lloyds Banking Group in April.– (Reuters)