Former Co-op fund managers launch bonus fight

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Fund managers who used to work at the Co-operative Bank have stepped up their fight to win the bonus they were not paid last year.

Employees of the Co-operative Insurance Society, which was bought by Royal London earlier this month for £220m, have started a formal grievance process against the bank to demand a collective payment of more than £1m, the Times reports.

The bank decided to not pay bonuses last year, which also applied to its asset management and insurance arms, after posting an overall loss of £599m, driven by a £350m writedown on commercial real estate and sub-prime mortgage lending.

However, the fund managers claim they should be entitled to a payout after arguing that they performed well over the year. The Times reports that 10 individuals from the Co-operative Insurance Society seeking bonus through the process.

Co-op confirmed to the paper that a formal grievance process had been launched, but said its decision to not award bonuses is justified as any payments are discretionary.

The dispute comes as the bank seeks to raise £1.5bn to cover holes in its finances. Co-op Group plans to contribute £500m and another £500m will come from the sale of its general insurance business.

The remaining £500m is planned to come from a bond swap in its subordinated debt, but bondholders are fighting for a better deal. A campaign has been started by Mark Taber, the investor who launched a challenge to a similar move by Bank of Ireland in 2011, to call for the bank to take more of the pain in its rescue plan.