According to the Telegraph, Aurelius Capital Management struck a deal to sell its shares of Co-op Bank to Perry Capital just prior to the news that former chairman Paul Flowers enjoyed purchasing cocaine and crystal meth. In related news, Co-op has conceded that it’s possible there is a connection between the fleeing of clients and the revelations.
Aurelius Capital, the largest hedge fund investor in the Co-op Bank, has sold down almost its entire stake to rival Perry Capital. The distressed debt fund, which was central to the negotiations which led to the bank’s revised £1.5bn recapitalisation plan, is understood to have agreed the sale before the recent scandal involving Rev. Paul Flowers came to light, but signed over the bonds to Perry after it emerged…News of Aurelius’s exit – it is thought the sale was driven by financial returns rather than concerns about the bank’s image – came as the bank sought to close a loop-hole resulting from its plan to fill the £1.5bn hole.
The Co-op admitted on Thursday that recent events “may have caused some brand and reputational damage” to the bank and may also have contributed to a recent loss of current account customers.
Aurelius reverses out of stake in Co-op after Flowers allegations [FT]
Co-op Bank’s biggest hedge fund sells almost entire stake [Telegraph]
Earlier: Former British Bank Chief Is Sorry About The Time He Bought Crystal Meth