Cooperative Bank A Case of Corporate Restructuring Free Essay Example, 2000 words

Through restructuring, a company is able to reassess its operations and seek the best changes that can bring about a desired change. Restructuring may arise due to changes in ownership or due to extreme financial difficulties that may lead to a given company being bankrupt. Various countries have different bankruptcy laws and refinancing schemes. The success of any given plan should always consider these laws as well as any accounting information about a given industry or market. Cooperative Bank (UK) The global financial crisis experienced during the 2011/2012 period resulted in a weak corporate sector in the United Kingdom as well as many other countries. The weak corporate sector was due to weaker consumer demand as well as a tightening of credit. Since the first economic crisis of 2008/2009, the cooperative bank has had difficulties in maintaining profitability (Cooperative Bank). Over the years, the bank has been slowly having an increasing in losses and has been sinking in debt. In 2012, a restructuring initiative was announced by the bank and several steps have been taken so as to ensure the bank reclaims peak performance and profitability. History The Cooperative Bank (UK) is a public limited company and is both a commercial and retail bank and whose headquarters is in Manchester, U.K. We will write a custom essay sample on Cooperative Bank A Case of Corporate Restructuring or any topic specifically for you Only $17.96 $11.86/pageorder now The bank was created in 1872, but was not a registered company until 1971. The company began as a branch of the Cooperative Wholesale Society but in 1876, it was later reformed and became the CWS bank (Wilkinson & Balmer, 1996). In 1974, the bank was the first bank to offer free banking to consumers who stayed in credit (Graham 2013). The parent company of the bank, the Cooperative Group Limited, combined the bank and the Cooperative Insurance Society into one holding society that was called the Cooperative Financial Services. In 2009, the United Kingdom’s government acquired 43.4% of Lloyds Banking Group, which allowed the Cooperative Bank to enter into talks with the banking Group to buy over 600 of its branches (Goff, 2013). The deal however fell through due to poor economic conditions witnessed in 2012 as well as the beginning of troubles in the bank. In 2012, the bank witnessed massive losses at the end of the financial year. During that year, the bank announced a  £1.5 billion capital shortfall (Wilson, 2012). Financial problems for the bank increased, leading to the bank being taken over by the Bank of England under the Banking Act 2009. After this, several restructuring initiatives were put in place to ensure a smooth transition and a return to profitability.