JC Flowers attacks UK mutual sector
JC Flowers, the massive US private equity company, has set aside EUR1 billion to attack the UK mutual sector after agreeing a deal with Kent Reliance which will see the company inject around £50 million into the UK mutual society. It has also been revealed that JC Flowers is in talks regarding a potential EUR450 million investment in Spain's Banca Civica which is run in the same manner as UK mutual societies.
It is also well known within the markets that the company is also looking towards a potential EUR400 million recapitalisation of Irish mutual society EBS which like so many other Irish financial companies has hit hard times. Despite the fact that the mutual sector has been around for hundreds of years in the UK there is every chance that the introduction of JC Flowers could effectively bring to an end an era for the UK financial arena. Mutual societies have by their very nature revolved around mutual benefits for members although this very basic rule of the sector is now very much a risk.
Whether the UK government will sit back and allow an overseas investor to effectively shake up the whole marketplace remains to be seen.
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