A&O loses Co-op Bank advisory role in bank sell-off

Clifford Chance has scooped a key advisory role for the Co-op Bank on its restructuring after Allen & Overy (A&O) found itself conflicted out due to a longstanding role as adviser to majority owner, the Co-operative Group.

A&O played a key role in the bank’s £1.5bn restructuring plan announced in June 2013, acting for the group (17 June 2013).

However, it today (4 November) emerged that as part of the group’s attempt to plug the £1.5bn capital hole via a debt-for-equity swap, the Co-op Group’s banking arm will cede control to institutional investors, led by US hedge funds Silver Point and Aurelius.

Under the plan, the Co-op Group will lose its majority stake in the bank, retaining only 30 per cent of shares. Institutional bondholders will hold 45 per cent, with the option to acquire another 25 per cent.

The Co-op Bank is set to announce its new general counsel in its prospectus filing for its public float in 2014, which is to be released imminently. Alistair Asher, former head of A&O’s financial investments group, recently took up the GC role at the Co-op Group (18 June 2013).

Clifford Chance has picked up the lead mandate from the Co-op Bank on the restructuring. The firm has also advised the Co-op Group for a number of years, advising on its failed acquisition of 632 branches from Lloyds Banking Group in July 2012 (19 July 2012), its merger with United Co-operatives (1 August 2007), and the £1.57bn acquisition of Somerfield (21 July 2008).

Linklaters is advising joint dealer managers UBS and HSBC in relation to the Co-op Bank’s liability management exercise. The firm was named as an advisor on the restructuring plan in June, with work led by banking and restructuring partner David Ereira.

It is understood that Shearman & Sterling is advising Silver Point and Aurelius.

A&O will continue to provide legal advice to the Co-op Group in the future.