Co-op Bank investors ‘not heading for exit’
THE hedge funds which saved The Co-operative Bank from collapse last year are not running for the exit, its bosses have assured, adding investors are “supportive” of the bank’s current strategy.
Chief executive Liam Coleman said there was a precedent for Co-op Bank shareholders to stay on for the longterm, noting that some of its “significant” investors had been involved since 2013.
When asked how long hedge funds might hold out, Mr Coleman said: “Those shareholders, those hedge funds, have remained very much committed to the bank and supportive of the bank across that period of time.”
Dennis Holt, who passed on the reins as chairman to Robert Dench last week, said a potential sale or flotation was not even under discussion at the bank’s recent meetings.
“Any thoughts on this would be purely speculation at this stage,” he said.
The comments come nearly half a year since The Co-op Bank struck a £700million rescue deal that saved it from potential collapse.
The refinancing and restructuring package agreed to by Co-op Bank’s hedge fund investors – which include Silver Point Capital, GoldenTree, Anchorage Capital, Blue Mountain and Cyrus Capital – saw the bank effectively sever its historic relationship with The Co-operative Group and separate itself from the wider mutual’s pension scheme.
It gave the lender the ability to meet regulations on long-term capital requirements, avoid it being wound down and allow it to continue as a stand-alone lender.
In its first set of full-year results since reaching the deal, Co-op Bank managed to report narrower pre-tax losses to £140.3million from £477.1million in 2016 thanks to a company-wide cost-cutting drive.
Its average annual headcount shrunk by about 800 to 3,965 workers over the year to December 31.
Mr Coleman said “simplification” of the bank could mean further job cuts. “It is likely to require reduced headcount but I’m not putting a particular number on that or a particular timing profile at this point in time,” he said.
The bank already announced earlier this year that it is planning to shut a further 27 sites across England and Wales by June 1.
The closures will bring the group’s network down to 68 branches in total.
The chief executive assured that the bank had drawn a line under the misconduct of former chairman Paul Flowers, who was banned from the financial services industry by the Financial Conduct Authority earlier this month.
Mr Flowers – who was chairman of the bank between 2010 and 2013, and oversaw its near collapse after a £1.5billion black hole in its accounts – was forced to step down amid allegations he bought and used illegal drugs, as well as claimed inappropriate expenses.
“That certainly draws the line in terms of previous directors,” Mr Coleman said.