Friday, May 10, 2013 7:52 am
Moody's downgrades U.K.'s Co-operative bank
By DANICA KIRKAAssociated Press
Concerns about the bank's credit status had been rising since it pulled out of a deal to buy some 630 branches from another U.K. lender, Lloyds Bank. The ratings agency said late Thursday that the Co-operative Bank's problems stemmed from the 2009 acquisition of Britannia Building Society, arguing that it failed to properly assess the losses that the portfolio would experience.
The Co-operative Bank is owned by the Co-op Group, Britain's biggest mutual business which is owned by individuals and includes supermarkets, funeral services and pharmacies.
The bank moved immediately to try to quash public concerns, saying in a statement that they are disappointed by the ratings downgrade, but that the bank has a strong funding profile and high levels of liquidity.
"In light of today's news, we would like to reassure customers and members that we haven't sought nor do we need government support," it said in a tweet posted on the group's account.
Britain is still struggling from the impact of government bailouts to Royal Bank of Scotland and Lloyds, which were rescued during the height of the 2008 financial crisis.
The banks' CEO, Barry Tootell, also resigned Friday, a day after the downgrade. But the bank insisted the decision was an unfortunate coincidence, and a statement on his resignation made no note of Moody's action. Tootell had been in charge of the aborted Lloyds deal.
"Barry took over the role of CEO to lead the banking business through the potential acquisition of the Lloyds Banking Group Verde Business." the company said in a statement.
"Following the recent decision by The Co-operative Group and Banking Group Boards to withdraw from the Verde process, Barry has decided that the time is now right for him to stand down from his role."