The Bank of England's Prudential Regulation Authority is planning another intervention in the operations of troubled U.K. lender Co-operative Bank Plc, which could include the lender's bail-in by the end of 2017, The Sunday Times reported Jan. 29, citing "City sources."
With a £400 million bond due to be repaid in September, the bank is reportedly likely to either miss the repayment or struggle to raise fresh capital. It may even have to pay an exorbitant coupon for a new bond issue if it opts for the September repayment, hitting profits as a result, The Sunday Times said. Rather than letting the bank pay off its dues and then struggle to find fresh capital, the regulators are considering a rescue, it added.
As a part of the Prudential Regulation Authority's plan for Co-op Bank, existing bonds would be destroyed to make way for a taxpayer rescue, yet under the Financial Services Compensation Scheme, deposits of up to £75,000 will be safeguarded, according to the British newspaper.