I went today to the Dulwich Picture Gallery, to see their Whistler exhibition, An American in London: Whistler and the Thames. I like the Dulwich gallery, and Whistler, and took a friend along who had never been there, and who I thought would like it too. It was a pity that it poured copiously all morning (though at least I didn't have to fret that I was wasting good gardening time), and that the trains out of London Bridge were slightly disrupted due to over-running engineering works, but altogether the travel wasn't too bad, for a journey involving a car trip through Colchester, two trains and a bus.
The exhibition was a delight, and is on until 12 January, so you have time to go and see for yourself. It does what it says on the tin, etchings, lithographs, drawings and paintings of the river Thames, boats, watermen, warehouses, barges, bridges. A portrait of one of Whistler's mistresses leaning on a mantelpiece creeps in, whose only connection with the Thames seemed to be that he was living quite near the river when he painted it, but overall the show sticks pretty closely to the brief. As I said, I like Whistler. My first introduction was via the Nocturnes, and it came as a pleasant surprise to discover what a good draughtsman he was. The captions around the gallery gave tantalising clues that he led a pretty colourful life, and I shall look him up later on Wikipedia (what did we do without it?).
Coming home, Colchester's traffic was particularly slow and sticky, so that it felt as though it was going to take almost as long to travel the seven miles from the station to my house as it had to cover the sixty-odd miles to London. As I crawled around the inner ring road, I had plenty of time to listen to the BBC's coverage of the Co-Operative Bank fiasco. I find the revelation that the Chairman took cocaine less disturbing than his appearance in front of the Select Committee, from which it appeared that he was unable to read a bank's balance sheet. For somebody who is supposed to be in charge of a bank, I think that's more worrying than what recreational drugs they took in their spare time, even if they were Class A and illegal.
The Telegraph website was running an article about how the drugs revelations put the £1.5 billion bank rescue package at risk, although Robert Peston tonight seemed to think it would go ahead. Neither of them had picked up on a story told to me last night by the Systems Administrator. The Co-Operative Bank has a preference share issue outstanding. It is not a big issue. The SA thought offhand it was in the order of magnitude of a hundred or a hundred and twenty million, small beer in the context of a one and a half billion rescue package, or the forty-seven billion of assets the Select Committee said the Co-Operative Bank had on its balance sheet, or even the three billion of assets which their former Chairman thought they had.
Preference shares are strange things, mid-way between an ordinary equity share and a bond. They rank below bonds for repayment, but above ordinary shares in the pecking order for dividends. They carry a flat rate dividend, and don't have the same voting rights as ordinary shares. But, and this is the killer part of the story, the preference shareholders have to vote on the restructuring proposals to save the Co-Op Bank, and according to the great doorstop of documentation that has been sent out to the preference shareholders, a turnout of seventy-five per cent is required.
In the old days, going back twenty years, prefs were the specialised province of a few investment managers running high income funds. The Systems Administrator was one of them. And in the good old days, anyone needing a seventy five per cent turnout of preference share holders could have contacted the SA, and the M & G, and about two other people, and got their vote. Not now. The investment institutions lost interest in this small and specialist market, and most of the outstanding preference issues ended up held by a small army of private investors, in search of high yield. One of them is the SA's great mate, who bought his for his school fees plan nearly twenty years ago at a yield of over nine per cent. He has received the great lump of literature an inch thick about the rescue proposals, which, being a Chartered Accountant, and that sort of chap, he has read. He does not expect the average little old lady living in retirement on the south coast to do likewise.
For the restructuring to go through, somebody has to find out who all these people are, and where they are, and then persuade three quarters of them to vote. Without the preference holders approving the rescue proposal, with a turnout of at least seventy five per cent, it won't happen, never mind what antics the former Chairman got up to. I asked whether the bank could not compulsorily buy in the preference shares and solve the problem that way, but the SA said not. There is no law that allows a company to compel shareholders to sell their shares back to the company. My mind is boggling slightly. The media haven't picked up on it at all. Either there is a way round it, which the SA and the SA's friend haven't thought of, or the BBC and the Telegraph are suddenly going to discover preference shares.
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