Co-op Bank: Slaughter of the Innocents?

Talk of bailing-in holders of certain bonds demonstrates that investors and depositors in European Banks are well-advised to be ultra cautious and not rely too much on reassurances uttered by regulators and their political paymasters. It beggars belief that after the chaotic 'resolution' of the debt crisis in Cyprus there is even talk of applying a hair-cut to the value of certain bonds issued by the Co-op bank. Most of those looking at losses would be retail investors, the most vulnerable and least sophisticated participants in the financial markets. Before their investments are impaired it would be appropriate to seize the full equity value of the bank - and one would hope that there is one.

Apart from this glaring injustice this episode is another sad illustration about the danger inherent in Merger transactions. The list of desasters is a long one, Bankamerica/Countrywide and Merrill Lynch, Commerzbank/Dresdner Bank, Lloyds TSB'HBOS to name the most prominent one