Hedge funds that now own 30% of Co-op Bank channel majority of their investments through offshore tax havens

Almost all of the 20 hedge funds that now own 30 per cent of the battered Co-op Bank have channelled their investments through offshore tax havens.



Companies House documents show that following the ‘ethical’ bank’s restructuring, 18 out of the 20 mainly US hedge funds keep their holdings in companies based in the Cayman Islands, Jersey, Luxembourg, Ireland or the British Virgin Islands.

News that the holdings are based in offshore tax havens could cause further disquiet among the bank’s customers, who are already upset about the hedge funds’ involvement.



18 out of the 20 hedge funds that own 30 per cent of Co-op Bank keep their holdings in offshore companies

Co-op Group lost control of the bank at the end of last year when it was unable to meet regulators’ demands that it raise £1.5 billion to guard against potential losses.



The bank was forced to restructure after running up hundreds of millions of pounds in losses on bad loans, mostly in commercial property.



It suffered further humiliation in November when its former chairman, the Reverend Paul Flowers, was revealed allegedly buying illegal drugs by The Mail on Sunday.



Co-op Group retains a 30 per cent stake in the bank and group chief executive Euan Sutherland must still find additional funds to meet the bank’s regulatory requirements.



Hedge funds argue that they are based offshore not to dodge tax but to avoid double taxation and ensure taxes are paid by investors according to where they are based.



The Companies House list reveals that Travelodge owner GoldenTree Asset Management is one of the hedge funds that bought Co-op Bank debt.



Only one fund, Fortelus, is based in the UK. All the others are US funds, some with London offices. None of the funds could be reached for comment.