Co-Op Rescue plan launched

antrobus

pqrdef wrote: »

Well if I held Co-op pibs I'd want an administrator or receiver in. I'd want a recognition that the bank belongs to the creditors and the Co-op no longer gets to call the shots.

A glance at last year's accounts suggests that the Co-Op Bank appears to have £3bn of net assets, generating an 'underlying profit' of £120m a year from its 'core business'. Given that there are lots of negatives to take off that 'underlying profit' plus the risk of losses from its non-core business, I'd have to say that for a price of £1 billion (which is apparently what the Co-Op want the bondholders to cough up) I'd expect to end up owning a big chunk of the Bank - at least 50%, maybe all of it.

sjaypink

Interesting bit of background to it all (don't know about the accuracy, but it blames Gordon Broon, so I'm convinced) - the Labour Party owe Co-op £3.6m ? :

http://hat4uk.wordpress.com/2013/06/17/banking-scandals-cooking-up-the-hook-ups-that-turned-into-fk-ups-and-britains-first-bailin/

The Co-Op deal was never a merger in reality: when Britannia came to the table, it was already a busted flush. Over a quarter of its lending business was extremely toxic, and probably more than that would’ve been defined as ‘sub-prime’. Notably, there were no bribes to Members to get them to approve the deal. And in the 2008 collapses, Britannia had found itself badly exposed to two failures. There was much drivel about “Britannia doesn’t need to do this deal, this is a merger of equals”, but in reality it was a hastily arranged fire sale. The question is, who twisted Co-Op’s arm to do it?

That nice Scottish country solicitor Alistair Darling already had some serious fiscal and political problems on his plate at the time. It wasn’t just that Gordooom was losing his marbles like a kid with holes in every pocket: he’d already been told by the regulator that Dunfermline BS was a disaster area – a total write-off….thanks to Lehman et al knowingly flogging them junk. There goes yet another fraud that was never investigated. Not only was it in Brown’s constituency, with Britannia also a basket case, Clerical Ali was fearful of mass panic, and desperate to avoid pro-Labour mutuals from dropping like flies. Daft hook-ups like Lloyds and HBOS were not yet the obvious f**k-ups they later became.

Darling’s personal reputation was also at stake: he had nailed his colours firmly to the Mutual mast. By March 2009, he’d had to give the Nationwide close to £1.6bn of taxpayers’ dosh to persuade them to absorb the Dunfermline crock; and although both Britannia and Dunfermline had been conned by banking’s mainstream sociopaths, the Chancellor knew that this would get lost in the detail as the Conservative Opposition went for his throat. He had to act. Let’s be more precise: Gordon Brown ordered him to act. And not for nothing did Tony Blair, when prime minister, remark that dealing with Brown was like “facing the dentist’s drill without an anaesthetic”. Because the Britannia wasn’t technically insolvent, the ‘merger’ could be engineered with the pols largely off-stage.

Kennyboy66

pqrdef wrote: »

Well if I held Co-op pibs I'd want an administrator or receiver in. I'd want a recognition that the bank belongs to the creditors and the Co-op no longer gets to call the shots.

This LME lark seems to be designed to ensure that nobody representing the creditors gets to go through the books and find out what's really been going on.

Pibs holders may as well wish for the moon on a stick.

Why people think that preference or PIBS with a 13% coupon were totally risk free is beyond comprehension.

antrobus

Kennyboy66 wrote: »

Pibs holders may as well wish for the moon on a stick.

Why people think that preference or PIBS with a 13% coupon were totally risk free is beyond comprehension.

The PIBS (more correctly now perpetual subordinated bonds) bearing a 13% coupon were a relic of the Britannia, and issued in 1992. Interest rates were higher in 1992 - that year kicked off with base rates at 10.375%, so a 13% coupon would not have been unusual at that time.

antrobus

sjaypink wrote: »

The question is, who twisted Co-Op’s arm to do it?

I don't believe that the Co-Op's arms needed that much twisting. I get the distinct impression that what we have with the Co-Op Bank is yet another case of over-ambitious management.

Conrad

The lefties over on discussion time were holding this up as a model good capitalist company not so long back.

As I've always said, there's a reason all those Quakeresque model firms succumbed to investment reality in the end.

southcoastsounds

antrobus wrote: »

I get the distinct impression that what we have with the Co-Op Bank is yet another case of over-ambitious management.

From today's Telegraph:

Mr Richardson left the Co-op Bank in 2011 with a package worth £4.6m, including a £1.4m payment for “loss of office”, as well as £1.39m in “compensation” for leaving and went on to join Marks & Spencer Bank as a non-executive director in February 2012.

Speaking to The Times, Brooks Newmark, a Conservative member of the Treasury Select Committee, said: “Marks & Spencer or any other financial services company would be mad to take on anyone as culpable as Neville Richardson was for the failings at both Britannia and the Co-op.”


The madness goes on and on . . .

grizzly1911

And on....

Lloyds 'knew about' black hole in Co-op Bank's accounts





The bosses of Lloyds Banking Group have told MPs that they knew there was a black hole in the accounts of the Co-operative Bank, four months before a vital deal with them collapsed.




http://www.bbc.co.uk/news/business-22949431

antrobus

grizzly1911 wrote: »

And on....

Lloyds 'knew about' black hole in Co-op Bank's accounts

The bosses of Lloyds Banking Group have told MPs that they knew there was a black hole in the accounts of the Co-operative Bank, four months before a vital deal with them collapsed.

http://www.bbc.co.uk/news/business-22949431

Previous reporting by the Telegraph claimed that it was Lloyds Bank's own due dilligence of Co-Op that unearthed the problem Britannia loans, and gave Lloyds the general impression that Co-Op bosses had no idea of what they were doing.

TruckerT

IronWolf wrote: »

Its problems havent gone undetected. The ratings agencies downgraded its bonds to junk a long time ago

grizzly1911 wrote: »

Lloyds 'knew about' black hole in Co-op Bank's accounts

The bosses of Lloyds Banking Group have told MPs that they knew there was a black hole in the accounts of the Co-operative Bank, four months before a vital deal with them collapsed

antrobus wrote: »

Previous reporting by the Telegraph claimed that it was Lloyds Bank's own due dilligence of Co-Op that unearthed the problem Britannia loans, and gave Lloyds the general impression that Co-Op bosses had no idea of what they were doing.

So I repeat my earlier question - 'despite all the recent angst and scrutiny surrounding the banking industry, why was it such a surprise that the Co-op bank was in some kind of trouble?'

Economic experts are full of facts and figures, but economic science seems to provide very few useful answers or solutions.

TruckerT