US hedge fund sold stake in Britain's Co-op Bank after Paul Flowers scandal
Aurelius Capital Management, the biggest hedge fund investor in the Co-op Bank, offloaded almost all of its stake in the London bank to hedge fund firm Perry Capital. The stake sale was made last week, just days after the scandal about the bank's former chairman Reverend Paul Flowers erupted. This was according to a report published by This Is Money.
The sale was thought to be executed because of economic reasons. Co-op bond prices have increased since a GBP1.5 billion funding black hole was revealed this month, the report said. A rescue package for the funding black hole will be voted on by bond holders. If approved, the investment will be converted to bank shares when it is floated on the stock market in 2014. The first deadline of the voting will be at 4:30 today. The final deadline will take place in early December, said the report.
According to insiders, the sale of the Aurelius stake will have no impact on the vote. Insiders say Perry Capital has agreed to vote for the approval of the rescue package, This Is Money reported.
Paul Flowers, the Co-op Bank's former chairman and ex-Methodist minister, was allegedly involved in a sex and drug scandal. The eruption of the scandal prompted several clients to leave the bank, according to the International Business Times report.