The Cooperative Bank’s Restructuring – will this be a case of lessons learned?

The UK’s bank regulatory and insolvency law structures were unprepared for the global financial crisis. As a result, the UK government’s response to intense bank stress in the immediate aftermath of the crunch led to a number of somewhat unsatisfactory ad hoc solutions ranging from nationalisations to encouraging otherwise healthy institutions to take over weaker banks. Generally speaking, there was a criticism, fairly made perhaps, that profits were privatised and losses had been socialised. In common with other European nations, the UK has striven hard to improve its insolvency laws so that a bank requiring a restructuring is able to contemplate a ‘bail in’ (a debt haircut in old parlance) of its subordinated bondholders to contribute to the restructuring. In recent days the Co-operative Bank (the “Bank”) has announced that it requires additional capital to satisfy regulatory requirements. The Bank needs additional aggregate Common Equity Tier 1 capital of £1.5 billion by 2015, comprising:

- £1 billion to be contributed in 2013; and

- £500 million to be contributed in 2014.

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Topics:  Banking Crisis, Bonds, EU, Insolvency, Restructuring, Secured Creditors

Published In: Bankruptcy Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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