The Co-operative Banking Group has issued a response to the recent Moody’s rating agency downgrade. Moody’s had cited fears that Co-op Bank is vulnerable to potential losses and might need external support as a result of costs linked to its acquisition of the Britannia Building Society in 2009.

A statement issued by the Group notes: “We are disappointed by the ratings downgrade announced by Moody’s. We have a strong funding profile and high levels of liquidity, which are significantly above the regulatory requirements. We do acknowledge, like the rest of our banking sector peers, the need to strengthen our capital position in light of the broader economic downturn and the pending introduction of enhanced regulatory requirements, and we have a clear plan to drive this forward throughout the coming months. In March, we announced the sale of our life business to Royal London and also our intention to sell our general insurance business. In addition to these measures we plan to significantly simplify our business, which will greatly improve our operational effectiveness and also enhance our capital position in the process.”

It adds: “Our banking business is already characterised by excellent levels of customer service and advocacy, as recently highlighted in reports by YouGov and uSwitch. Our primary current account base in recent years has enjoyed significant growth. The actions we will now take to strengthen our balance sheet and simplify our business model around a core relationship banking offer, will create a compelling co-operative banking business which is truly distinctive within the banking sector.”

The downgrade preceded the resignation of Barry Tootell, CEO, The Co-operative Banking Group. He will be replaced temporarily by Rod Bulmer.

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