Thu, 16 Feb 2017 | BUSINESS SALE
Potential buyers have started signalling their interest in parts of the Co-op Bank, days after its board put it up for sale.
The Times reports that smaller lenders including OneSavings Bank, created by US private equity house JC Flowers, and buy-to-let lender Paragon are among the suitors, alongside Clydesdale Bank and Banco Sabadell, owner of TSB.
It comes as Sir Vince Cable, the former business secretary, and two Treasury Committee MPs voiced concerns about the planned sale.
Earlier this week Manchester-based Co-op Bank, which nearly collapsed four years ago, said it had been adversely affected by low interest rates, restructuring costs and high charges for things like mis-sold PPI.
The bank wants to sell itself outright but it’s thought it may only be able to sell-off parts of its business.
According to the Times, the bank is hoping to agree a sale in the next few months but if nothing emerges the Prudential Regulation Authority may well step in, a move which would force losses on bondholders rather than taxpayers.
The Co-op Bank has around four million customers and is known for its ‘ethical’ stance. The bank does not invest in fossil fuel extraction, the arms trade, genetic engineering and other ‘non-ethical’ sectors, a standpoint its board thinks will make it attractive to buyers.
But some are concerned that a sale of the bank raises competition and consumer choice problems.
Sir Vince Cable and MPs George Kerevan and Helen Goodman told BBC 5 live today that a sale would be “bad news” for UK bank customers.
"Whatever we think about the Co-op Bank and how it got into trouble, it's bad news when we have only a very, very small number of banks catering to domestic and business customers," Sir Vince said.
"Britain is in a very unusual position of having a very high concentration of banks, quite unlike most continental countries such as Germany, quite unlike the United States, where there are lots of big and small banks catering to different needs."
If a sale does go ahead, analysts think TSB is one of the most credible bidders, with one observer telling the Times: “If they could get the Co-op at the right price and with the right timescale, they would be very interested.”
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