News Column

United States : HEDGE FUNDS are being urged to increase CO-OP BANK operations and strategy

August 23, 2014

The Co-operative Bank is facing demands from its biggest shareholders to increase an overhaul of its operations and commercial strategy.

A number of hedge funds who became investors in the Co-op Bank were forced into an emergency fundraising who have now expressed concerns about the pace at which the new strategy is being implemented by its CEO Niall Booker.

External investors hold more than 75% of the company's shares, with the Co-op Group now owning just over 20%.

Hedge funds include GoldenTree Asset Management and Silver Point are understood to believe that the bank's new strategy includes cutting the number of products and refocusing on retail and small business customers.

The attention of banking regulators is now more difficult to push through reforms.

There is a sense that management is using regulatory scrutiny as an excuse to sit on their hands.

News of the tensions with the shareholders comes the day before the Co-op Bank reports the results which analysts expect to show further losses fuelled by additional provisions for product mis-selling.

The ethical bank has been forced to raise 2 billion to plug a capital black hole, with losses of 1.3 billion which is expected to continue for at least 2 further years.

The bank's other shareholders is Hayman Capital Management, whose principal is Kyle Bass, who is an executive who made millions of dollars by predicting the US housing market crisis in 2007.

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Source: TendersInfo (India)

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