Co-op Bank es­capes fines for past fail­ings

The Pak Banker - - COMPANIES/BOSS -

The Co-op­er­a­tive Bank will not be fined for fail­ings that helped push the bank to the brink of col­lapse be­fore it was bailed out by bond­hold­ers, Bri­tain's fi­nan­cial reg­u­la­tors said, ar­gu­ing that cap­i­tal should be pre­served to bol­ster its bal­ance sheeet.

The cen­sure for se­ri­ous risk man­age­ment and trans­parency fail­ings will be par­tic­u­larly em­bar­rass­ing for the 143-year old bank, which had built its rep­u­ta­tion around its eth­i­cal cre­den­tials.

Co-op Bank is try­ing to re­cover from its near-col­lapse in 2013, when it was hit by a yawn­ing hole in its fi­nances, a drugs scan­dal, an ex­o­dus of top ex­ec­u­tives and losses from bad com­mer­cial real es­tate loans.

The cri­sis saw bond­hold­ers take con­trol of the bank, with its long-time owner, the mu­tual Co-op­er­a­tive Group, rel­e­gated to a mi­nor­ity hold­ing.

Co-op Bank was the only Bri­tish len­der to fail a UK bank­ing stress test in De­cem­ber and has agreed a plan with the reg­u­la­tor to bol­ster its cap­i­tal strength.

The Fi­nan­cial Con­duct Au­thor­ity (FCA) is­sued a public cen­sure against the bank for breach­ing list­ing rules that re­quire com­pa­nies to en­sure pub­lished in­for­ma­tion is not mis­lead­ing, al­low­ing in­vestors to make fully in­formed de­ci­sions.

The FCA, which un­der­took the 18-month in­ves­ti­ga­tion into the ac­tions of for­mer man­age­ment and the 2009 merger with the Bri­tan­nia Build­ing So­ci­ety, also found that Co-op Bank fell short of its re­spon­si­bil­ity to be open with its reg­u­la­tors, one of the prin­ci­ples that reg­u­lated firms must abide by.

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