The bail-in of the western banking system has officially begun, as the UK’s Co-Operative Bank is seeking a £1.5bn bail-in recapitalization with junior bond holders and investors (including pension funds) facing a complete-100% wipe-out on £370m of permanent interest bearing shares (PIBS) issued by the Co-op.
As The Telegraph reports, the bail-in is “good news” for Co-Operative Group (Indeed!):
Co-operative Bank faces nationalisation if junior bondholders reject ‘haircut’.
The Co-operative Bank’s rescue recapitalisation needs the support of £1.05bn – or around 80pc – of the holders of £1.3bn of its junior debt or the lender could end up being nationalised.
Euan Sutherland, the chief executive of the Co-operative Group, called the rescue plan “good news for The Cooperative Group, The Cooperative Bank, its customers and our members.”
He said it meant both investors and the group would make “a joint contribution” to the bank’s recapitalisation, without any help from taxpayers.
However, a group of pensioners and other retail investors in the Cooperative Bank are facing massive losses under the rescue.