News / Brèves Back to previous selection / Retour à la sélection précédente ANOTHER BANK BAIL-IN, IN LONDON 18 June 2013 (LPAC) — London’s global policy of "bank bail-in" austerity has struck again, at a London bank, in which so far, not depositors but "junior bond creditors" are being turned into stockholders and offered large losses. These include pension and other similar funds. The bank is the British lender Co-operative Bank, a relatively large regional bank with about $125 billion in assets, on paper, and which dates to 1872. Co-operative is known as an "ethical bank", being against investing in arms companies and for supporting gay rights, etc.; but its ethics definitely include major investments in financial stocks, derivatives, and London commercial real estate. Its credit rating has been lowered to junk and it has been ordered urgently to raise capital by the British Financial Services Authority. With its stock price on the floor, actually raising capital by selling more shares is essentially out of the question. So it is trying to sell off one subsidiary and otherwise seize capital, telling bondholders that about $2.5 billion of their bonds will be swapped for stock (worth much less) by the end of 2013. According to BBC’s report, "By requiring bondholders to exchange their debt securities for shares, Co-operative Bank is trying to avoid turning to the British government for help." But the position of Co-operative Bank is essentially that of European banks as a whole, excepting only its recent attainment of junk-credit status. The British FSA has told all the London banks they have to raise capital urgently this year, by a total of $40 billion. Their stock prices are generally on the floor, as are those of Eurozone banks; and their asset books are chock full of losses unrealized for 5 years or longer, in the overall range of hundreds of billions of euros. So the only thing that can "re-capitalize" them is government investment, or conversion of unsecured creditors and uninsured depositors into stockholders: Bail out, plus bail in. The process will be chaotic, and Co-operative Bank’s attempt should be watched from that standpoint. [pbg]