MORE than 1,000 retail bondholders have now signed up to a campaign group to fight for a better deal on the Co-op Bank bail-in, the group’s head told City A.M. last night.
They are writing to MPs, the Treasury Select Committee, the Financial Conduct Authority and the Bank of England’s prudential regulation authority in an effort to put pressure on the bank to give them a more generous offer.
The bank has a £1.5bn capital hole and has announced plans to take around £500m from bondholders to fill the gap. That will see bondholders lose upwards of 30 per cent of their investments, and they are expected to get a mixture of shares and new bonds in return.
The campaigners argue the offer does not reflect the needs of the investors, who are often pensioners reliant on the steady income of their current investments.
“At first the Co-op said they were mindful of their small investors and they would look for something more appropriate for retail bondholders, maybe paying for financial advice,” said campaigner and fixed income investor Mark Taber. “But that advice is needed right away, and the bank has just gone very quiet on us.”
The Co-op Bank is expected to unveil its full plans for the bail-in and the flotation of its shares in a prospectus in September.
The Co-operative Group has been wiped out as a shareholder in the bank, and is contributing £1bn to the recapitalisation, taking a majority stake again in the lender.