As it puts itself up for sale, is the Co-op Bank now essentially worthless?

Frances Coppola, a former banker who blogs at coppolacomment.blogspot.co.uk, says Yes.

The Co-Op Bank is reaching the end of the road. Yesterday’s announcement that it is putting itself up for sale follows on from disclosure last month that it was facing a full-year loss for the third year running, and would fail to meet Prudential Regulation Authority (PRA) capital requirements for some years to come. The accounts due out in March will probably highlight material risk to the bank continuing as a going concern.

The proposed sale therefore amounts to an immolation. It is likely to be at a heavily discounted price.

If there are no takers, even at a fire sale price, the next step would be resolution by the PRA. However, even if a buyer is found, the Co-Op Bank brand may not survive.

The Co-Op Group may object to the bank continuing to use the brand name. The secretary of state may revoke the bank’s right to describe itself as “cooperative”. And the buyer may absorb the Co-Op Bank into its own brand. This 144-year-old institution seems set to disappear from Britain’s high streets.

Bill Blain, a strategist at Mint Partners, says No.

The idea a cooperative bank can be privately held seems an impossible contradiction, but finance evolves. There are niches for better and different banks.

Co-op Bank’s recent history is unfortunate, but a bank built upon cooperative roots, approach and an ethical stance has attractions. With the right management it could retain and build franchise.

The high street banks have become too big and impersonal, and don’t meet the expectations of many clients – ask anyone who has recently tried to open a business account! The new net-based challenger banks are limited and blinkered by their focus.

A local bank with local roots and a strong sense of community could succeed – witness the success of Sweden’s Svenska Bank where local branches have devolved responsibility for lending on anything it “can see from the church steeple”. It works. Niche banking, particularly in SME finance, based on the Co-op’s sense of history and purpose could be a more powerful model than simply writing it off.