MSE News: Co-operative Bank: Savers' cash safe as rescue plan revealed
Comments
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Does that mean the opposite is also true i.e. balance sheets strengthen as a company's health declines? Due to liabilities reducing as the value of their debt declines if I haven't misunderstood.
That part of the balance sheet improves but other parts can suffer. Quite how much they suffer depends on how honest they are about the state of the loan book, which TBH is the root cause of many of the issues.
It's because of this that B3 is forcing banks to hold a much higher proportion of Tier 1 capital so that banks can "bail in" holders of these rather than needing a "bail out" injection down near the equity level.
The most common kind of T1 that banks will be issuing in future are "cocos" (contingent convertibles) that *automaticallly* switch from being bonds to being equities if the T1 ratio falls below a certain level.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
All in aid of enabling the banks to carry on trading while even more deeply insolvent, so that when they do go bust they'll take the maximum number of creditors with them. If governments allow that to happen.gadgetmind wrote: »It's because of this that B3 is forcing banks to hold a much higher proportion of Tier 1 capital so that banks can "bail in" holders of these rather than needing a "bail out" injection down near the equity level.
The most common kind of T1 that banks will be issuing in future are "cocos" (contingent convertibles) that *automaticallly* switch from being bonds to being equities if the T1 ratio falls below a certain level.
Might have been better to go back to the old idea that they have to call the Receiver in at the point where only the shareholders lose."It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
I'm baffled as to how the rest of the financial sector was falling over in 2007-2009 yet Co-op has only now realised it's loan assets contain some toxic nonsense.gadgetmind wrote: »That part of the balance sheet improves but other parts can suffer. Quite how much they suffer depends on how honest they are about the state of the loan book, which TBH is the root cause of many of the issues.
I can't believe that they have only just become so. It seems to me that someone somewhere (auditors?) has been hiding the truth for the last few years in the hope it will go away.0 -
How many times do we read on these boards that you don't lose money on falling shares if you don't sell them? A lot of people would have been bust in 2008 if they'd had to value commercial property at what they could actually auction it for tomorrow. But they preferred to believe in the green-shoots-just-round-the-corner price. Supported of course by all those official growth forecasts from the Treasury and the OBR and the BoE and everybody else.opinions4u wrote: »I'm baffled as to how the rest of the financial sector was falling over in 2007-2009 yet Co-op has only now realised it's loan assets contain some toxic nonsense."It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
Living for tomorrow might mean that you survive the day after.
It is always different this time. The only thing that is the same is the outcome.
Portfolios are like personalities - one that is balanced is usually preferable.
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Apparently Co-op is going to make some offer to the 13% subordinated bond holders. This bond is perpetual, with no call date, the coupon is cumulative. Co-op has suspended the coupon payment according to their website.
What will happen to the bonds of those holders who will choose not to accept that offer? Any ideas?0 -
opinions4u wrote: »I'm baffled as to how the rest of the financial sector was falling over in 2007-2009 yet Co-op has only now realised it's loan assets contain some toxic nonsense.
There is a four letter answer to that question.
http://www.thisismoney.co.uk/money/news/article-2332377/Questions-KPMG-audit-troubled-Co-op-Bank-accountancy-firm-failed-spot-impending-financial-turbulence.htmlI am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
chickenandegg wrote: »What will happen to the bonds of those holders who will choose not to accept that offer? Any ideas?
OK, I threw in the TLA "LME" without explanation, which was my bad as I should have know that not everyone dabbles in bank paper beyond ordinaries.
To prevent hold outs, the first step before a haircut (LME) is a CAC.
http://en.wikipedia.org/wiki/Collective_action_clause
This basically means that the turkeys that don't vote for Christmas get stuck in the oven anyway.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
co-op bond situation
when everyone is talking about bonds
do they mean the savings product
"fixed rate fixed term bonds" ?
i ask as i have all my savings tied up in a 2 year fixed bond with the co-op
so am i going to get no interest? and given shares ?
and am i going to lose 30% of their value as stated in the guardian article ?
regards0 -
gadgetmind wrote: »To prevent hold outs, the first step before a haircut (LME) is a CAC.
Which I think is already there. From the Propsectus:
Clause 13 (MEETINGS OF BONDHOLDERS, MODIFICATION AND WAIVER) starting on page 32 contains the sentence:An Extraordinary Resolution passed at any meeting of the Bondholders shall be binding on all the Bondholders, whether or not they are present at the meeting, and on all Receiptholders.
Living for tomorrow might mean that you survive the day after.
It is always different this time. The only thing that is the same is the outcome.
Portfolios are like personalities - one that is balanced is usually preferable.
0
This discussion has been closed.
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