"Pensioners at risk in Co-op crisis
Thousands of pensioners and high-net-worth investors are at risk of losing a vital income stream under a rescue being prepared for the stricken Co-operative Bank.
The supermarkets-to-funerals mutual is preparing an emergency rescue plan for its financial subsidiary that is expected to include losses for holders of the bank’s junior debt, including £310m of permanent interest bearing shares (PIBS) issued by Britannia Building Society before it was taken over by the Co-op, and £60m of preference shares.
Of the £370m of bonds, which pay annual interest of between 5.55pc and 13pc, some £30m is held by members of the public. Any rescue would almost certainly see the coupon cut or cancelled, costing retail investors about £3m a year.
The Co-operative Group is searching for ways to fill a capital hole in the bank estimated to be £1bn to £1.8bn. It has until the end of the month to come up with a plan that is acceptable to its supervisor, the Prudential Regulatory Authority (PRA). Alongside bondholder “haircuts”, the Co-op is expected to raise funds by selling assets.
Advisers working on a rescue are also believed to be looking at creating a new class of share to recapitalise the bank. Co-op Bank has £1.3bn of subordinated debt, some of which could be switched into the new instrument – which would differ from both normal shares and the building society equivalent – under a “liability management exercise”.
Analysts at Morgan Stanley estimate that any liability management exercise could net the Co-op Bank a gain of £172m. In total, the US investment bank estimates the lender could find about £980m in the next year through various capital-raising methods. "
Source: Pensioners at risk in Co-op crisis - Telegraph
Brittania did not want to give me half decent mortgage when I checked with them couple of years ago
Thousands of pensioners and high-net-worth investors are at risk of losing a vital income stream under a rescue being prepared for the stricken Co-operative Bank.
The supermarkets-to-funerals mutual is preparing an emergency rescue plan for its financial subsidiary that is expected to include losses for holders of the bank’s junior debt, including £310m of permanent interest bearing shares (PIBS) issued by Britannia Building Society before it was taken over by the Co-op, and £60m of preference shares.
Of the £370m of bonds, which pay annual interest of between 5.55pc and 13pc, some £30m is held by members of the public. Any rescue would almost certainly see the coupon cut or cancelled, costing retail investors about £3m a year.
The Co-operative Group is searching for ways to fill a capital hole in the bank estimated to be £1bn to £1.8bn. It has until the end of the month to come up with a plan that is acceptable to its supervisor, the Prudential Regulatory Authority (PRA). Alongside bondholder “haircuts”, the Co-op is expected to raise funds by selling assets.
Advisers working on a rescue are also believed to be looking at creating a new class of share to recapitalise the bank. Co-op Bank has £1.3bn of subordinated debt, some of which could be switched into the new instrument – which would differ from both normal shares and the building society equivalent – under a “liability management exercise”.
Analysts at Morgan Stanley estimate that any liability management exercise could net the Co-op Bank a gain of £172m. In total, the US investment bank estimates the lender could find about £980m in the next year through various capital-raising methods. "
Source: Pensioners at risk in Co-op crisis - Telegraph
Brittania did not want to give me half decent mortgage when I checked with them couple of years ago
