The Co-operative Group

has confirmed it has reached an “agreement in principle” to save its ailing bank.

In a video message to customers and staff, Co-op Group CEO Euan Sutherland said today the new deal reached with bondholders would see the society retain 30% of its shareholding in the bank.

“As a group, The Co-operative retains effective control of the bank,” Sutherland said. “We have secured 30% of the equity which makes us the single largest shareholder.

“This bank will remain The Co-operative Bank. We are embedding The Co-operative principles into the constitution of the bank.”

He added that the priorities of the deal had been to build a “fair and attractive” proposal for small shareholders, and to make sure The Co-op didn’t turn to the taxpayer to bail out the bank.

“This is the first bank to be rescued as a standalone entity without taxpayers’ money,” Sutherland added.

More information on the deal will be made available in the coming days, the Group said.

The society was forced to rethink its original ‘bail-in’ plan, announced earlier this year, following a backlash from small bondholders and hedge funds.

The Co-op Bank also revealed this morning it was putting aside an extra £100m-£105m to cover bad debts.