Britain's struggling Co-operative Bank puts itself up for sale

Record ID: 275671

  • Title: Britain's struggling Co-operative Bank puts itself up for sale
  • Date: 13th February 2017
  • Summary: LONDON, ENGLAND, UK (FEBRUARY 13, 2017) (REUTERS) (SOUNDBITE) (English) BGC PARTNERS, MARKET ANALYST, MIKE INGRAM, SAYING: "Despite a number of reforms, they'd have to again look at their corporate governance. Any would-be buyer of this franchise would certainly want to have a free hand in its administration. And I'm not sure that will be possible under the current managem
  • Embargoed: 27th February 2017 11:20
  • Keywords: bank banking sale co-op Co-operative Bank UK Britain finance
  • Location: LONDON, ENGLAND, UK
  • City: LONDON, ENGLAND, UK
  • Country: United Kingdom
  • Topics: Company News Markets,Economic Events
  • Reuters ID: LVA00263CSKUL
  • Aspect Ratio: 16:9
  • Story Text: Britain's Co-operative Bank, rescued from the brink of collapse by a group of hedge funds in 2013, has put itself up for sale as it seeks to build up its capital to meet regulatory requirements.
    The bank said on Monday (February 13) that it had made considerable progress implementing its turnaround plan, cutting its cost base by a fifth since 2014.
    But it still expects to make a "significant loss" for last year and said that building up capital has proved difficult given low interest rates.
    The Bank of England's Prudential Regulation Authority, which regulates Co-operative Bank, said it welcomed the measures announced on Monday.
    The Co-operative Bank, which has four million customers, said it was also considering ways to raise equity capital from existing and new capital providers, and a potential "liability management exercise" of its outstanding public debt.
    Last month, the bank said it expected its core capital ratio to fall below 10 percent, falling short of regulatory requirements.
    "Despite a number of reforms, they'd have to again look at their corporate governance. Any would-be buyer of this franchise would certainly want to have a free hand in its administration. And I'm not sure that will be possible under the current management regime. And it also comes at a point in time where the banking sector overall in the UK, although it's felt it has generally turned a corner, faces many challenges" said BGC Market Analyst, Mike Ingram.
    The bank's immediate issue is the repayment of 400 million pounds worth of bonds that mature in September.
    Co-op Bank nearly folded in 2013 with a 1.5 billion pound hole in its capital after losses from problem real estate loans.
    The bank was rescued by bondholders, including hedge funds, mainly from the United States, who bet that rising interest rates and a cost-cutting turnaround plan would improve the bank's fortunes and make them a return on their investment.
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