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| Moody's downgrades Co-op Bank's debt rating to 'junk' | |
| (35 minutes later) | |
| Ratings agency Moody's has downgraded the Co-operative Bank's debt rating to "junk" status, citing fears that it is vulnerable to potential losses. | Ratings agency Moody's has downgraded the Co-operative Bank's debt rating to "junk" status, citing fears that it is vulnerable to potential losses. |
| The agency warned that the bank may need "external support" if it could not strengthen its balance sheet. | The agency warned that the bank may need "external support" if it could not strengthen its balance sheet. |
| The Co-op said it was "disappointed" by Moody's decision. | The Co-op said it was "disappointed" by Moody's decision. |
| The news preceded the resignation of chief executive, Barry Tootell, following the bank's failure to buy 631 branches from Lloyds Banking Group. | |
| Mr Tootell will be replaced temporarily by Rod Bulmer, the bank said. | Mr Tootell will be replaced temporarily by Rod Bulmer, the bank said. |
| 'Clear plan' | 'Clear plan' |
| Responding to the Moody's downgrade, the Co-op said it had a "strong funding profile" that was "significantly above the regulatory requirements". | Responding to the Moody's downgrade, the Co-op said it had a "strong funding profile" that was "significantly above the regulatory requirements". |
| But in a statement, the bank admitted there was a "need to strengthen our capital position in light of the broader economic downturn and the pending introduction of enhanced regulatory requirements". | But in a statement, the bank admitted there was a "need to strengthen our capital position in light of the broader economic downturn and the pending introduction of enhanced regulatory requirements". |
| It added: "We have a clear plan to drive this forward throughout the coming months." | It added: "We have a clear plan to drive this forward throughout the coming months." |
| These plans include selling off its life and general insurance businesses, and simplifying its operations. | These plans include selling off its life and general insurance businesses, and simplifying its operations. |
| In March, the Co-op Bank reported annual losses of £674m for 2012. | |
| Moody's reckons the bank's "problem loan ratio" rose to 10.9% in 2012, up from 8.1% in 2011, reflecting a deterioration in its commercial property portfolio. | |
| Most of Co-op Bank's problems stem from bad loans associated with its takeover of Britannia Building Society in 2009. |