Co-operative Legal Services not affected by Co-op bank 'bail in'
CLS in no doubt about its future as it pledges to continue with expansion plans
Co-operative Legal Services is not affected by the Co-operative Bank's financial rescue plan unveiled this morning that will see the bank listing on the London stock exchange, the legal arm of the Co-op has said.
Under the £1.5bn 'bail in' - so called because it does not involve a public 'bail out' - existing Co-op Bank bond holders will be given the option to convert these to shares.
The move comes after the downgrading last month by ratings agency Moody's of the bank's debt rating to 'junk', and the collapse its deal to buy more than 600 branches from the Lloyds group.
Asked whether the move would affect the future of Co-op Legal Services, a spokesperson told Solicitors Journal: "no, our expansion plans continue".
Only last week Co-operative Legal Services launch a multi-million pound TV and radio campaign in a bid to become "the largest and best-quality consumer legal services brand in the country".
At the time Co-op Legal Services marketing director Ian Mackie told Marketing Week about his organisation's customer-centric approach, saying that: "For a solicitor, it's an alien approach".
Mackie's comments triggered an indignant response from Law Society chief executive Des Hudson who called on Mackie to withdraw them and "begin to make amends by apologising to every solicitor employed by the Co-op".
Mackie's remark, Hudson said, "seems to suggest that the Co-op have invented client service. They didn't. Solicitors firms of many shapes and sizes have been providing excellent service, including in many cases fixed price or free initial advice to their clients, for many years."
Co-op Bank said it anticipated the bond ratings to be "downgraded significantly", but that once the the exchange offer was completed, it would expect the rating agencies "to improve their ratings in due course".
"Whilst we recognise that the short-term outlook is challenging, the measures we are announcing today mean we now have a credible plan for addressing the capital shortfall we face and can turn our attention to managing our non-core assets down and restructuring our core bank, " said Co-operative Bank chief executive Niall Booker.
The launch of the exchange offer is expected to take place in October 2013.