Co_op Bank Rescue Plan

Co-op Bank Rescue Plan.

In a new change of events the Co-operative Bank has release a rescue deal which will make up for the shortfall on its balance sheet.

The £1.5bn deal will allow for bondholders in the bank to exchange their bonds for capital and shares, this will give them a much better stake in the bank.

The finished terms of the deal need to be finalised for its launch which so far is set for October. The parent Co-op Group will also be providing support to make up for the shortfall.

Our View

The above share swap deal is not that great for bond holders who invested for a safe, fixed income not stockmarket exposure.

Much has been written about the Co-op being an ethical bank and it being a sad state of affairs.  Yet again, this is about poor management.  This is about the need for banks in general to make profit without charging too much for services because of a fear of losing loyal clients.

Free banking and other cheap services are unsustainable, the only way forwards for all banking groups is to stop free banking and start charging a real commercial rate for the services that they offer.