Ratings agency Moody’s has downgraded the bank’s debt rating and suggested the Co-op might need “external support” from taxpayers after expressing doubts it can manage future losses.
The financial services firm has been trying to pay down debt by selling its life business and putting its general insurance unit up for sale.
In a statement, the Co-operative Bank says it is disappointed by Moody’s downgrade and said the asset sales are part of a series of measures it is taking to strengthen its capital position.
It adds positive perception of the Co-op brand will help it pull through current difficulties. “Our banking business is already characterised by excellent levels of customer service and advocacy….”, it says in the statement.
Negative headlines about possible bail-outs could put at risk the high brand rating scores the Co-operative has historically enjoyed. YouGov BrandIndex rating scores for Buzz – a net balance of the positive and negative things people hear about a brand – put it fourth in a list of 27 high street banks and it holds lofty positions in charts for quality and value.
Separately, it was announced today (10 May) chief executive Barry Tootell is to step down. Tootell had been in charge of steering the deal to buy 630 branches from Lloyds Banking Group.
The deal, however, fell through last month with the Co-op blaming the worsening economic outlook and increased regulatory requirements.
He is replaced by Rod Bulmer on an interim basis.