Co-op bank for sale

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  • tacpot12
    tacpot12 Posts: 8,086 Forumite
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    A great shame. A bank brought to its knees because it bought a building society.

    This was not the reason that it was brought to its knees, it was mainly crippled by its own decisions on PPI, sub-prime lending (of which the Co-op Bank had more than Britannia) and decisions regarding investment in IT systems. Add Peter Marks' disasterous "Project Unity" where the retail group took over control of the bank, a business they didn't understand and which they had no experience of running, and then you have destroyed a bank. Buying Britannia should have started a turnaround but the Bank and the Group's management wrecked any chance of recovery.
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
  • PeacefulWaters
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    Anthorn wrote: »
    My point about financial backing flew over your head.
    No it didn't. Why would somebody give the Co-op a shed load of cash?
    have been making noises for quite some time about making retail personal bank accounts available. They most closely match Co-op Bank in their ethos.
    I get that. Are they big enough to buy it and capitalise it?
    Co-op Group were the previous owner of Co-op Bank. As I said if we look at how the hedge funds make a profit from a takeover they sell the company back to the original owner which is Co-op Group.
    They've lost a fortune.
    Lloyds Banking Group is possibly more a long shot but the acquisition of MBNA shows that they are expanding.
    LBG have a weak market share in cards. They have a string market share in current accounts, savings, loans and mortgages.
    But it's all speculation and if we read the posts in this thread no-one is likely to want it. If that's true then perhaps there are European banks sitting on the horizon.
    Are there any string European banks who aren't already in the uk?
    But my money is still on LBG.
    There's not a hope in hell of them getting regulatory approval from within the UK or the EU.
  • PeacefulWaters
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    tacpot12 wrote: »
    This was not the reason that it was brought to its knees, it was mainly crippled by its own decisions on PPI, sub-prime lending (of which the Co-op Bank had more than Britannia) and decisions regarding investment in IT systems. Add Peter Marks' disasterous "Project Unity" where the retail group took over control of the bank, a business they didn't understand and which they had no experience of running, and then you have destroyed a bank. Buying Britannia should have started a turnaround but the Bank and the Group's management wrecked any chance of recovery.
    They somehow failed to notice Britannia's poor quality loan book for four years after the takeover. Britannia's property lending caused bigger write-offs than anything Co-op had in the books.
  • antrobus
    antrobus Posts: 17,386 Forumite
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    Anthorn wrote: »
    ...Triodos have been making noises for quite some time about making retail personal bank accounts available. They most closely match Co-op Bank in their ethos....

    Triodos is a Dutch bank, controlled by a trust. They are about one-third of the size of Co-op Bank.Triodos would need to raise a heap big chunk of new capital to buy. I don't think that is likely.
    Anthorn wrote: »
    ...Co-op Group were the previous owner of Co-op Bank. As I said if we look at how the hedge funds make a profit from a takeover they sell the company back to the original owner which is Co-op Group....

    If the Co-op Society really wanted the bank, they would have pumped in that £1.5bn themselves back in 2013. They didn't even take up the rights issue in 2014. I don't think they want it back.
    Anthorn wrote: »
    ....But my money is still on LBG.
    LBG had enough problems bailing out HBOS. I think that might have put them off bailing out another bank.
  • antrobus
    antrobus Posts: 17,386 Forumite
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    ColdIron wrote: »
    Well those evil hedge fund vultures saved it when it was looking over the edge of the abyss along with the jobs of its employees

    It should be made clear, that when the Co-Op Bank finally admitted in June 2013 that they needed an extra £1.5 bn in capital, the solution to the problem was a recapitalisation with the Bank's bondholders (including a significant number of hedge funds) agreeing to swap their debt for equity. Since the Bank announced that "the only realistic alternative" to this plan was a "resolution of the bank under the UK Banking Act 2009", which is bankruptcy for banks, and that if that happened "all holders of the existing securities would receive no recovery at all", it should be apparent that the bondholders didn't have much choice.
  • antrobus
    antrobus Posts: 17,386 Forumite
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    They somehow failed to notice Britannia's poor quality loan book for four years after the takeover. Britannia's property lending caused bigger write-offs than anything Co-op had in the books.

    I would concur.

    Yes, the Co-Op Bank did burn up £300 m on an IT system that was scrapped, yes they have incurred significant costs in compensation for PPI mis-sales (and other similar transgressions), and yes, they wasted millions on Project Verde and other vainglorious projects.

    But I still they lost the most money on the Britannia Corporate Loan Book. I am aware that certain ex-Co-Op directors have sought to claim otherwise, but since the subsequent HoC Treasury committee concluded that Co-op Bank’s "governance structure up to the middle of 2013 was entirely inadequate for a bank of any size", I think we can understand why it took them a few years to realise that they had bought one big heap of junk. I don't know the exact figure as to the 'impairment losses' suffered, but is has to be more than a £1bn, and might be closer to £2bn. It's difficult to say, the Bank's own loan book wasn't perfect either.
    ...They've lost a fortune.

    I strongly suspect that most of those ex-bondholders have already recognised their lost fortunes a few years ago. If they ever get any money back, it will be a bonus.:)
  • aurion22
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    Anyone know how/whether the sale of the Co-op Bank would affect SMILE?


  • Zanderman
    Zanderman Posts: 4,708 Forumite
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    edited 13 February 2017 at 11:48PM
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    aurion22 wrote: »
    Anyone know how/whether the sale of the Co-op Bank would affect SMILE?

    Smile is merely a trading name for the Co-op bank. If Co-op is sold, Smile is sold with it.

    Whether they (whichever bank takes it all on) keep the Smile brand is obviously completely unknown.

    As a brand it has, in effect, been meaningless for years as its functions and systems are exactly the same as Co-op and its original raison d'etre as 'the internet bank' became meaningless as soon as all banks became internet banks too.

    And Smile has done nothing 'new' for years either - I'm surprised Co-op haven't entirely absorbed it back into one brand already (I say this as a Smile customer for 15+ years, and a Co-op Bank customer for 10+ years)
  • System
    System Posts: 178,104 Community Admin
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    antrobus wrote: »
    But I still they lost the most money on the Britannia Corporate Loan Book. I am aware that certain ex-Co-Op directors have sought to claim otherwise, but since the subsequent HoC Treasury committee concluded that Co-op Bank’s "governance structure up to the middle of 2013 was entirely inadequate for a bank of any size", I think we can understand why it took them a few years to realise that they had bought one big heap of junk. I don't know the exact figure as to the 'impairment losses' suffered, but is has to be more than a £1bn, and might be closer to £2bn. It's difficult to say, the Bank's own loan book wasn't perfect either.

    I don't think they 'bought' anything when it came to Britannia.
    They got the Building Society for free :p
  • aurion22
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    Zanderman wrote: »
    Smile is merely a trading name for the Co-op bank. If Co-op is sold, Smile is sold with it.

    That's what I was afraid of. Have just opened a current a/c with the Halifax, following research on MSE. Sad to be leaving SMILE .. for the name, if nothing else. I always found them efficient & helpful.

    :(
    Save
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