Co-Operative Group, the 150- year-old British mutual, will cut a “significant” number of jobs at its banking unit as it cedes control of the division to creditors.

Co-Operative Bank will close about 50 of its 324 branches by the end of 2014, the Manchester, England-lender company said in a statement today. Creditors will own about 70 per cent of the bank, which Co-Operative Group doesn’t expect to post a profit before at least 2015.

“The branch network closures have already started,” Co- Operative Group CEO Euan Sutherland told reporters on a conference call today. “There will be significant job cuts,” he said, declining to say how many will be eliminated.

Co-Operative Group, whose businesses range from supermarkets to funeral parlors, was forced last month to give up control of its banking unit to help plug a £1.5 billion capital hole at the division. Because Co-Operative Group is owned by customers, it couldn't plug the gap at the banking unit by turning to shareholders in a rights offering, like publicly traded competitors including Barclays Plc.

Initially, Co-Operative Group tried to raise part of the money pledging £1 billion to the banking unit through selling assets and increasing borrowings and asked bondholders to provide £500 million more in a debt swap. Instead, a group of creditors opted to take over control of the bank, which has about 5.5 million customers.

The group includes Aurelius Capital Management, Canyon Capital Advisors and and Silver Point Capital. Co-Operative Group will be left with a 30 per cent stake after injecting about £462 million into the bank. The restructuring will be "the first successful consensual creditor bank bail-in in the UK, without taxpayer support," the group said in a statement today.

Bloomberg