Ratings agency Moody's has downgraded the Co-Operative Bank's debt rating a to 'junk' status. The ratings agency has warned that the bank, which is linked to the Co-Operative supermarket group in the UK, is vulnerable to potential losses and may need "external support" if it cannot stabilise its balance sheet. In March 2013, the Co-Op Bank reported annual losses of £674m for the 2012 financial year. Most of the problems stem from bad loans associated with the Co-Op Bank's takeover of Britannia Building Society in 2009.
The Co-Op said that it was 'disappointed' by the agency's downgrade. It also commented that it had a 'strong funding profile' that remains 'significantly above the regulatory requirements'. However, in a statement, the Bank conceded that there 'was a need to strengthen our capital position in light of the broader economic downturn and the pending introduction of enhanced regulatory requirements."
The statement continued, "We have a clear plan to drive this forward throughout the coming months", with these plans to include the sale of its general insurance and life insurance businesses, along with a simplification of its operations.
