Co-op set to unveil ‘bail in’ plan to plug £1.5bn hole
The Co-op bank faces questions over its capital position Continue reading the main story
The Co-operative Bank is set to unveil a rescue plan to tackle the hole in its balance sheet.
The BBC’s business editor, Robert Peston, has learned that the hole is around £1.5bn.
He said a lot of the capital to be used to plug the hole will come through a "bail in" – a process where bonds will be turned into shares.
However, the plan makes Co-operative Bank appear much more like a bank than a mutual organisation.
An announcement between the bank and the Prudential Regulation Authority could come within the next few hours.
Under such a rescue deal, it is unlikely that taxpayer money will be required or that savers will be affected, but it could affect up to 5,000 smaller investors.
Concerns about the bank’s capital arose after a deal with Lloyds collapsed.
In April, the Co-op cancelled a plan to buy 631 bank branches from Lloyds Banking Group.
That was followed two weeks later by the ratings agency Moody’s downgrading the bank’s debt to junk status.
The Co-op will raise much of the £1.5bn of precious capital it needs from what is known as a "bail in", or converting bonds – loans to the group – into shares which will be listed on the London Stock Exchange.
This contrasts with the many bank "bail outs" of 2007-8, in which desperate banks were kept alive by injections of funds from the public sector.
With a minority of Co-op Bank’s future shares tradeable on the Exchange, the Co-op Bank will begin to look more like a conventional bank and less like a mutual – although it will still be controlled by the mutual Co-op Group.
The agency warned the bank may need "external support" if it could not strengthen its balance sheet.
In response to Moody’s, the Co-op said it had a "strong funding profile" that was "significantly above the regulatory requirements".
But the bank admitted there was a "need to strengthen our capital position in light of the broader economic downturn and the pending introduction of enhanced regulatory requirements".
It added: "We have a clear plan to drive this forward throughout the coming months."
Most of Co-op Bank’s problems stem from bad loans associated with its takeover of Britannia Building Society in 2009.
Any agreement with Co-op would be the first test of the new city regulator, the Prudential Regulation Authority, since it assumed responsibility from the Financial Services Authority in April for regulating the banks. Part of its mandate is to ensure that the banks won’t have to be bailed out from taxpayer money again.
The Co-operative Group, parent of Co-op Bank, was founded in 1863. It has more than 6 million members and employs more than 100,000 people.
Statistics: Posted by DIGGER DAN — Mon Jun 17, 2013 5:16 pm
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City officials pull the plug on vibrator giveaway, leaving thousands dissatisfied
They must have rubbed Mayor Bloomberg the wrong way.
City officials pulled the plug on a vibrator giveaway by the Trojan condom company yesterday, disappointing potentially thousands of pleasure-seeking women who hoped to get their hands on some no-cost sex toys.
“I’m 57 years old. I should be able to get a vibrator!” declared Linda Postell, who was among hundreds of women (and men!) waiting in the heat on Pearl Street only to be left unsatisfied. “I have a problem with the smoking ban, and the soda ban — and now this!”
Trojan sent tingles of excitement across the city when it announced the giveaway of some 10,000 vibrating sex toys from hot-dog-style pushcarts.
New Yorkers line up for free vibrators on Pearl Street yesterday.
The promo was shut down, but not before Justina and Maria Santiago — mom and daughter — scored the sex toys.
Trojan began by handing out about 400 free vibrators without incident on Sixth Avenue in Rockefeller Center between 11 a.m. and noon.
The giveaways were scheduled to start at 4 p.m. in the Flatiron District and near the South Street Seaport.
As carts arrived at each location, nearly 300 women — and quite a number of guys — queued up.
But instead of climaxing in a successful giveaway, the promotion was prematurely interrupted by City Hall, which sent a dark-suited representative to put the squeeze on Trojan’s “Pleasure Carts.”
The spoilsport, who declined to identify himself, told Trojan’s reps at the Flatiron location that they had to shut down because of the size of the crowd that had gathered.
The event barely got started. The downtown event shut down about 40 minutes later, and Trojan managed to dole out just a couple of hundred battery-operated tinglers.
The decision to nix the giveaway clearly caused the mayor’s voter satisfaction ratings to plummet among the empty-handed thrill seekers.
“There’s a lot more important things the city should be worried about than a free-vibrator giveaway,” complained Park Slope bar owner Melody Henry, 42. “Bloomberg doesn’t want anyone to have fun. You can’t have a giant soda. You can’t have a vibrator.”
The Mayor’s Office insisted the vibrator switch-off was a permit issue, and not due to any prudishness.
“This activity promoting Trojan products, which impeded pedestrian and street traffic, did not have a permit,” City Hall said in a written statement. “The production company affiliated with the event is currently in discussions with the Mayor’s Office to hold a promotional event with proper permits at a later date.”
Statistics: Posted by yoda — Thu Aug 09, 2012 11:24 am
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