Co-Operative Bank Boosts Provisions Amid Bondholder TalksAmbereen Choudhury
Co-Operative Bank Plc, the U.K. lender seeking to raise capital after losses, said it will set aside as much as 105 million pounds ($170 million) more to cover costs related to client redress.
The 100 million pounds to 105 million pounds of additional provisions relate to the cost of compensating clients who were sold payment-protection insurance they didn’t need and other additional provisions, Manchester, England-based Co-Operative Bank said in a statement today.
Co-Operative Bank is being pushed by regulators to bolster capital by the end of 2014 after the failure of its bid for 632 Lloyds Banking Group Plc branches exposed a shortfall of 1.5 billion pounds. The bank said in the statement today that the provisions are already part of its capital plan.
The lender plans to raise 500 million pounds by asking existing bondholders to exchange subordinated debt for new equity and senior debt as part of a plan to plug the shortfall.
Bondholders have told Co-Operative Bank they oppose that plan, and Co-Operative Group Ltd., the bank’s customer-owned parent, may lose control of the lender, the BBC reported on its website today, without saying where it obtained the information.
Co-Operative Bank said today it’s still working on its recapitalization plan and will disclose further information “shortly.”