Co-op Bank deal with ‘aggressive’ US private equity firm spells ‘devastation for customers’, warns MP
The Co-op Bank is facing a backlash after it emerged it was holding takeover talks with ‘aggressive’ US private equity firm Cerberus Capital Management.
The self-branded ‘ethical’ lender, which has more than 3.3m customers, has been on the block for months as its current hedge fund owners look to offload it.
But one MP said a takeover by Cerberus ‘spells devastation for customers’ as he urged the bank’s owners, who include Silver Point, Anchorage Capital and Goldentree, to steer clear of the deal.
Takeover talks: The Co-op Bank, which has more than 3.3m customers, has been on the block for months as its current hedge fund owners look to offload it
Tory MP Kevin Hollinrake, co-chair of the All-Party Parliamentary Group on Fair Business Banking, said: ‘I couldn’t think of a worse bidder. Cerberus have got a terrible track record of how they treat borrowers, and are incredibly aggressive.
‘This is the antithesis of ethical banking. It’s really worrying for the Co-op Bank, because they’ve had a history of being commercial but also very altruistic. It spells devastation for customers.’
New York-based Cerberus, one of the world’s most active investors in the financial services sector, is run by Donald Trump ally Stephen Feinberg.
It was branded a ‘veritable hound of hell’ by MPs last year for its treatment of borrowers.
It had bought billions of pounds’ worth of loans after the 2008 financial crisis from lenders such as Lloyds and RBS, and snapped up £13.3billion of Northern Rock mortgages from the Government, which was managing the bust bank’s assets.
Many borrowers who had taken out these loans, including small businesses and homeowners, were struggling to keep up with repayments.
Cerberus pursued the borrowers ferociously, to make a return. Some were threatened with eviction from their homes and business owners fought costly legal battles.
Justin Modray, of Candid Financial Advice, said: ‘Cerberus has a reputation for being hard-nosed and I imagine it will be more focused on the bottom line than being kind to Co-op customers.’
The Co-op Bank and Cerberus declined to comment yesterday.