Ratings agency Moody’s downgraded the bank’s debt rating last week and suggested the Co-op might need “external support” from taxpayers after expressing doubts it can manage future losses.
The Co-operative Bank said in a statement in response that the sale of its life and general insurance business as well as positive perception of the Co-op brand will help pull it through.
However, YouGov BrandIndex rating scores show the brand’s Buzz score – a net balance of the positive and negative things people hear about a brand – has slumped to -60.2 (13 May), a 54 point drop from the -4.2 registered a week earlier (6 May) and an even steeper dip from the positive 12.2 enjoyed at the beginning of the month (1 May).
Its Index score – which takes into account how consumers rate the brand in terms of impression, quality, value, reputation, satisfaction and whether they would recommend it – fell to 32.4 from 56 a week earlier.
Despite the figures, a spokeswoman for the bank says it has seen “very limited customer reaction” to the Moody’s downgrade so far. She adds it will continue to engage with customers through “usual channels”.
The bank has been trying to reassure customers by tweeting customers that it is “business as usual” and encouraging them to call its service line with any further questions.
The causes of the Co-operative Bank’s financial difficulties are not the same as those that would have finished off Northern Rock and RBS but for state aid but the potential consequences arguably are.
The suggestion the bank could require a bail-out could leave an indelible stain on the brand if not handled carefully.
The Co-op has had considerable success with its ethical and community focussed positioning, which has led to a lofty position in the affections of consumers, particularly since the 2008 financial crisis and scandals such as the LIBOR rate-rigging that have beset the sector.
Even if a taxpayer bailout is avoided and it is spared the images of customers anxiously queuing around the block to withdraw savings that killed Northern Rock, work is still needed.
Reassurance it is business as usual is, of course, necessary in the short-term. So is reaffirming its approach to banking, once its reported £1bn capital hole is filled.