There’s a hole in the Co-opJune 17th, 2013 • 6 Comments
From time to time, we all miscalculate our budget, and end up with a shortfall here and there. Perhaps you went a bit mad in Sainsbury’s, or blew an extra £20 down the carvery. For the Co-op bank, though, there appears to be something of a ‘hole’ in the Co-op Bank’s balance sheet – a £1.5billion shaped hole.
Today the bank unveiled plans to plug the hole by converting loans to the group into shares, which will be offered to Co-op bond holders. (That’s called ‘subordinated debt’, financial fact fans).
The plan – called a ‘bail in’ – will mean that the Co-op will be listed on the stock market for the first time, and it will give bond holders what they say will be ‘a significant minority stake’ in the ailing bank.
The Co-op will still have a controlling stake in the bank, but surely bringing in commercial investors goes against the original idea of the Co-op as a caring, sharing mutual? Chief Executive Euan Sutherland says the Co-op Bank hadn’t changed its ways.
“We have always been a PLC, wholly owned by the Co-operative Group. The majority of the bank will still be owned by the Co-operative Group. There will be no change to our ethos or the way we run our bank.’
The bank will be floated on the stock market in October, but their new shareholders are likely to make big losses before they see any returns. This new Gordon Gekko approach is a far cry from paying your Co-op divvies to buy your funeral, but sod it – at least the taxpayers aren’t involved in this latest bank rescue mission.
When I heard about this I was gutted for the older generation, they already have it tough as it is. I’m not sure if floating the bank will be the best idea either.
Where’s the feminist sub agenda in this story?
Where’s the racism in this story?
I doubt it would float anyway. All those bricks and stuff will sink.
So CO-OP becomes like all other banks; publically listed and controlled by a small number of VC groups. I see ‘root and branch’ streamlining on the horizon which translates to branch closures and lay-offs.
Flex wit da erb