THE CO-OPERATIVE Bank’s rescue plan is facing its first challenge as small investors in the lender band together to fight for a better deal, it emerged over the weekend.
More than 600 bondholders have so far signed up to show their interest in a campaign run by Mark Taber, an investor who successfully challenged Bank of Ireland’s subordinate bond raid in 2011.
Retail bondholders, typically those with less than £10,000 in the Co-op Bank’s bonds, face losing at least 30 per cent of their investments.
Swapping the bonds for a combination of new bonds and shares will raise £500m for the bank, a key part of its plan to plug the £1.5bn capital hole discovered by the Bank of England’s prudential regulation authority (PRA).
“Large investors get to talk to the banks and their advisers and negotiate, but small investors can get left out in the cold. We want to get together and give them a voice,” Taber told City A.M. yesterday.
“We have done this before – we can make quite a lot of noise and ask pertinent questions of the regulator and the bank.”
Taber believes the group should shoulder more of the burden of the recapitalisation and give a better deal to investors.
It could involve giving investors more new bonds or cash. The Co-op Group could retain a greater stake in the bank.
The bank declined to comment, but it is thought there is some room for negotiation.
The PRA is expected to be concerned only that the recapitalisation happens, not the manner in which it happens.