Co-op bank sale: windfall for coop members

caronoel · 13 February 2017 at 4:28PM

So the loss making co-op bank is being sold:
http://www.thisismoney.co.uk/money/saving/article-4219164/Loss-making-op-Bank-disappear-high-street.html

The co-op still owns a 20% share in the bank.

Any chance of a windfall payout to co-op members?

PeacefulWaters · 13 February 2017 at 4:35PM

None whatsoever.

JuicyJesus · 13 February 2017 at 9:34PM

To expand on PW's point:

1) If there was a windfall payment you'd already have got one from the sale of 80% of the bank's ownership a few years back.

2) The bank (Co-operative Bank plc) is not itself a mutual, it is just a bog standard plc that happens to be (part-)owned by Co-operative Group plc, which is a mutual. Thus even if 80% of the bank wasn't already owned by hedge funds, ownership of the Co-operative Bank wouldn't be vested in members, it would be vested in the Co-operative Group which would be the entity that needed to be compensated for any sale. The reason building societies have windfall payments is because they are directly owned by their customers, while the Co-op Bank was only ever indirectly owned by Co-op members, which not all of their customers are/were.

grey_gym_sock · 13 February 2017 at 10:11PM

in addition, the co-op group may end up getting absolutely nothing for its 20% shareholding in co-op bank. because it may be that all existing shares in co-op bank become worthless, and somebody else gets 100% of the shares in co-op bank in return for putting fresh cash into the bank, or as part of an exchange, in which tradeable securities (subordinated debt, or senior debt) they hold in co-op bank are swapped for shares in co-op bank.

and if co-op group does get any cash for its 20% shareholding in co-op bank, they will clear get less than the value they have down on their balance sheet for the shareholding (which they already reduced recently). so not exactly a bonanza for them. and they will probably just use any cash to shore up their own finances a bit. co-op group has also had some trouble with its finances in recent years, though it is apparently having more success sorting it out than co-op bank has had.