Outlook If the behaviour of bank management teams should worry us, the same can be said of some bank investors. An action group of Co-op bondholders are complaining that they are being forced to take a hit to help shore up the ailing bank's balance sheet. They argue that the wider Co-op group should put its hand in its pocket to cover the bank's entire £1.5bn capital hole, leaving them unscathed.
I'd like to ask these debt holders a question: if they thought they were buying a rock-solid investment, did they never wonder why there was a 13 per cent annual coupon payment attached? Here's some guidance: a high coupon means high risk. If you want zero risk, put the money in gilts and live with the low returns.
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies