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Britain's Co-op bank up for sale

Monday, February 13, 2017 - 01:35

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. Ciara Lee reports.

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For sale. Rescued from the brink of collapse nearly four years ago, Britain's Co-operative bank is looking for a buyer. Bailed out by bondholders including a group of hedge funds. They say the bank's made progress implementing its turnaround plan, cutting its cost base by a fifth since 2014. But it needs to build up its capital. Its core capital ratio is expected to drop below ten percent - falling short of regulatory requirements. And the bank expects to make a significant loss for last year, with low interest rates partly to blame. (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 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." With four million customers, the Co-operative says it's considering ways to raise equity capital from existing and new capital providers. It's immediate issue though 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. Those who rescued it had been betting on rising interest rates and a cost-cutting turnaround plan to improve the bank's fortunes.

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Britain's Co-op bank up for sale

Monday, February 13, 2017 - 01:35