The Co-operative Group has finalised the process of dividing its legal function in the wake of losing control of its banking arm to investors in October.
The consumer group was given until 20 December to restructure the in-house legal function, following investor approval of the bank’s plan to host the UK’s first ever ‘bail-in’ by a consortium of hedge funds.
Co-op began the process in October, when the Co-operative Bank split away from its former owner, Co-op Group. As a result the legal team was split, with general counsel Alistair Asher, who was appointed in June (18 June 2013), taking control of the Group legal function.
At the end of November the Co-operative Bank installed former Coventry Building Society legal chief Brona McKeown as general counsel (29 November 2013). As part of the division, the bank and group lawyers are required to be physically separated and have their own distinct IT systems.
Under the new structure Asher will no longer provide legal advice to the bank, but will sit on its executive committee and retain an interest due to the Group’s 30 per cent ownership stake.
Asher said there would be an “ongoing relationship” between the Group and Bank, partly due to joint initiatives including the Co-op membership scheme
It is understood that the Group lawyers have retained their office space in the Co-op’s One Angel Square head office in Manchester, while the banking group has moved into CIS Tower across the road.
In-house lawyers have been assigned to their new roles, and, Asher said, both sides would be hiring to fill any gaps left. He added that there would be “roughly a 60/40” split between the proportion of lawyers working for the group and the bank.
The GC’s are yet to finalise the shape of the bank and group’s panels, but expect to begin the process shortly.
The Co-op Group’s formal panel currently consists of about 10 firms – four of which played key roles in the organisation’s recent restructuring.
Allen & Overy and Linklaters picked up the largest chunk of work, while Clifford Chance and Addleshaw Goddard were also heavily involved (4 November 2013).
Asher said: “All the firms involved in the restructure did an outstanding job on a very difficult transaction. There’s no reason to change advisers. There’s some follow-up work for them to do and we expect their roles to be ongoing for that.”
Asher joined the Co-op last July, having taken a lead role advising the group on its £1.5bn debt restructuring as a partner at Allen & Overy. He is the first to hold the new position of Group general counsel, established as part of a wider raft of management changes at the organisation (18 June 2013).
In November, the Co-operative Group agreed to hand 70 per cent of the bank to private investors and close 50 branches, in a bid to fill its £1.5bn capital hole as required by regulators.
The rescue is the first recapitalisation of a UK bank since the financial crisis, and the first – unlike Lloyds and the Royal Bank of Scotland – to be done without government intervention.
Just last week, the Bank of England’s regulation arm, the Prudential Regulation Authority and City regulator the Financial Conduct Authority announced they are to investigate the events that led to the bank’s £1.5bn capital shortfall being revealed last summer.