A spokesman said the closure was part of a wider plan of "simplifying the business", which has already seen the closure of about 40 branches in the UK.
He said the branch handled Â£400m from 16,000 customers, with 6,000 in Guernsey and 2,000 to 3,000 in Jersey.
The spokesman said a factor in the decision was the high cost of operating in an offshore banking centre.
The branch is the only one in the Channel Islands.
He said account holders would be contacted directly over the next few days to outline what he described as the "next steps", but customers should not be concerned and mortgages would continue to be honoured.
The company would look to find room for its employees elsewhere in its business, the spokesman added.
The Guernsey branch of the Co-operative Bank is to close early next year with the loss of 11 jobs.