Creditors seize control of Co-op Bank
Creditors, reportedly led by a pair of hedge funds, have wrested control of Co-op Bank from the UK's Co-operative Group.
Creditors, led by a pair of hedge funds, are to wrestle control of Co-op Bank from the UK’s Co-operative Group.
Bondholders and creditors have rejected the group’s plans to plug the £1.5bn ($2.3bn) hole in the lender’s balance sheet, forcing them to revise plans to save the ailing bank.
In a statement, the group said: "We have been engaging with different bondholder constituencies and seeking to balance the requirements and expectations of these parties.
"We currently expect that many elements of any recapitalisation plan will be materially different to the outline provided on 17 June 2013, whilst still meeting the additional £1.5bn Common Equity Tier 1 capital requirement."
The Co-operative Group originally planned to pump £500m capital into the bank, sell its £500m insurance assets and leave bondholders to take £500m of losses before floating the bank on the stock exchange, retaining a controlling 70% stake.
Bondholders rejected these plans and demanded in September that the group retain a stake of smaller than 50%, leaving bondholders including hedge funds in control when the bank is floated on the London stock exchange.
An official announcement of the revised rescue plans is expected 28 October.