CompaniesOct 9 2013

Co-op bondholders still in dark: Taber

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Mr Taber, a Bristol-based professional investor and spokesman for several thousand Co-operative Bank retail bondholders who represented £100m of investment, said the lender was not giving his group the same kind of access as a group of hedge fund investors affected by its plans to convert bonds into shares in the bank.

The recapitalisation plan would raise £500m, however Mr Taber said it would adversely effect many retail bondholders who tended to be elderly and depended on them for retirement income.

He said: “A lawyer, adviser or other representative of the bondholders should be allowed the same access as other groups in order to get the best deal, but that has not been forthcoming, and they could be left with the crumbs on the floor.”

“I have heard from a lot of bondholders and their families who are concerned over the uncertainty. This has been going on for four months and they still don’t know what will happen to their money.

“We are hoping for an offer from the bank within the next few weeks, but what then for the people who will need financial advice? It doesn’t leave much time. We also still don't know if there is a plan B, or what will happen if people vote against the recapitalisation.”

The bank’s decent into crisis during 2013 can be traced back to its acquisition of the Britannia Building Society in 2008, and the toxic loans which were part of Britannia’s balance sheet.

Neville Richardson, the former chief executive of Britannia who then went on run the Co-operative Bank told the Treasury Select Committee last month that he believed the acquisition of Britannia had no effect on the Co-op’s current crisis.

However, Mr Richardson’s comments were firmly rebuffed by the Bank of England, first in a terse comment which claimed it strongly disagreed with Mr Richardson’s view regarding the Britannia loan book situation, and then in a letter by PRA chief executive Andrew Bailey.

The letter, sent to Treasury select committee chairman Andrew Tyrie MP, said the risk profiles of Britannia’s assets “were, and remained a key factor in our assessment of the Co-operative Bank’s current capital position.”

A spokesman for the Co-operative Bank said it was planning to publish its prospectus for the restructuring plans in the fourth quarter of 2013, and was focused on delivering the plans, at the expense of any “plan B”.

He added that the bank was still talking to representatives of bondholders regarding the provision of financial advice ahead of any vote on the recapitalisation plans.