Co-operative bank - downgraded to Junk

gadgetmind

oz0707 wrote: »

What's the idiots guide to these preference shares?

They are a fixed income investment but they are only one notch above ordinary shares in the capital hierarchy, which means they are *very* high risk. That they are ever sold retail to widows and orphans, while sophisticated investors buy senior bonds on better (overall) terms, is something of a disgrace.

However, with high risk can come high reward, and you can do well from buying distressed subordinated capital. Or you can lose every penny in the blink of an eye.

You need to know what you're buying. You need to read the prospectus and ask people to explain anything that isn't clear. And you need to invest only a teeny amount of your available capital in any one issue and institution as the government, lawyers and guys in pinstripes are very much not on your side.

oz0707

TMF has a good thread on at the minute which had quotes from the prospectus/reports.

Reminds me of BARC when they were selling for 150 ish. Got out of them at the 300 mark.

So with these specifically, if you were to view them as ordinary shares (security wise) with the benefit of a fixed dividend
9.25% on the 100p price would I be seeing that right?

gadgetmind

oz0707 wrote: »

9.25% on the 100p price would I be seeing that right?

Which issue are you looking at?

I'm not sure I'd touch the prefs or the LT1s at the moment. Those buying the LT2s know what they are doing IMO.

oz0707

CPBB 9.25% non-cumulative
Although is subject to a divi of shares if 9.25% not paid out at ratio of 4 shares for every 3 you own

gadgetmind

CPBB are prefs, so lowest of the low on the capital hierarchy, only one notch above ordinaries. I hold Lloyds and Nat West prefs, so am not averse to a degree of risk, but this is a look before you leap situation.

I need to do some research and see if there is anything more senior on sensible nominals. CPBC looks far more tempting, but I'd prefer to be even more senior right now.

TheRage

I run a registered charity that banks with the Coop - does that have the same protection?

antrobus

TheRage wrote: »

I run a registered charity that banks with the Coop - does that have the same protection?

Depends.

Financial Services Compensation Scheme: what it means for charities
http://www.charitycommission.gov.uk/detailed-guidance/protecting-your-charity/financial-services-compensation-scheme-what-it-means-for-charities/

How much money are you talking about?

TruckerT

Given the fact that the banking system has been under a microscope for the last 5-6 years, both by commentators and regulators, how is it possible that, overnight, they switched from being the good guys (who were about to take on the 'High Street') to being the latest basket case?

TruckerT

Thrugelmir

TruckerT wrote: »

Given the fact that the banking system has been under a microscope for the last 5-6 years, both by commentators and regulators, how is it possible that, overnight, they switched from being the good guys (who were about to take on the 'High Street') to being the latest basket case?

Bad lending decisions in commercial property lending. Resulting in far higher losses. Precisely why banks are being required to raise capital adequacy levels of the next umpteen years. If banks are unable to meet the rising bar then they are in trouble.

TruckerT

Thrugelmir wrote: »

Bad lending decisions in commercial property lending. Resulting in far higher losses. Precisely why banks are being required to raise capital adequacy levels of the next umpteen years. If banks are unable to meet the rising bar then they are in trouble.

Yes, but why was it such a surprise?

TruckerT