Mutually Assured Destruction: an ethical bank knackered by two successive governments
Following Anna Raccoon’s CoOp/Labour exposé of last Sunday – and The Slog’s Monday suggestion that across-the-board UK political banking incompetence is rising up like a rake to smack Westminster deservedly in the face – both sites find themselves being vindicated as we hit Wednesday.
Blogosphere predictions are go for landing this morning as the full horror of MAD applied to the Co-op comes dribbling out from Westminster, Treasury and banking sources. I said on Monday that the official haircut estimate of a 30% haircut for the CoOp Innocents to the Slaughter was way on the low side, and yesterday afternoon the Telegraph confirmed this with a piece reporting how Moody’s expects ‘investors in these bonds to only be able to recover between 35pc and 65pc of their original investment, with the negative outlook indicating the risk that the final loss faced by investors may be greater.’
Last night, the Guardian coloured in more detail. It posted at just gone 8pm last night to say even Lloyds told the Government that CoOp Bank’s struggle to wrestle the TSB branches to the ground was under-capitalised, and probably unwise. It seems that in evidence to the Treasury select committee, Lloyds CEO António Horta-Osório told the TSC “We had doubts about Co-op’s capability in December 2012 when we were given the revised plan for the Co-operative Group,” he said. “From the combined plan for Co-op and TSB, our analysis was clear that there was a shortfall of capital. And that was when we had our first concerns about their ability to close the deal.”
But as I suggested earlier in the week, from 2009 to 2011, first Labour’s Darling and then the Coalition’s Vince Cable had arm-twisted the CoOp into such a dung-heap of toxic debt and distraction, it would’ve been a miracle if they’d been the right way up by December 2012 anyway. Now the CoOp must plug a £1.5bn hole in its balance sheet (says the Guardian) and I’m inclined to believe them, as the exact same figure of what being mucked about by pols has cost the ethical mutual bank popped into my inbox yesterday around lunchtime.
Among those folks who are awake, this story is a spouting aorta bloodying the hands of nincompoop politicians who tried to perform an organ implant two weeks after a heart transplant…for largely politicial purposes. Not only that, Labour can be accused of overestimating the skills of its tame bank (to which it is heavily indebted) while ConDemned Camerlot tried to use it as the dumping ground for an EU edict and a politically motivated merger failure at LloydsHBOS. Further upstream, the private banking mobsters had been busily pulling the bogus bonds bankruptcy caper on small mutuals – sufficient to require all that taxpayer bailouts in the first place.
If ever you wanted a 7 days a week Panto – with Captain Hook, a veritable chorus-line of Ugly Sisters, Mr Pastry and Saturday matinees included – this one is it. But the cry of “Oh no they didn’t!” will neither ring true nor be found amusing. For the equation in play here is as follows:
banking hubris + political arse covering = taxpayer funded bailout x [incompetent political merger suggestions + banker scams] = citizen bailin
Or put another way, he who pays a Piper often realises he has paid a pig to sing, gets no song at all…but pays double anyway. And so the Global Looting continues. I’m still being told there is to be “a major announcement” in the next twelve hours. Stay tuned….and don’t forget RBS, SME suits, and Libor allegations.