MSE News: Co-operative Bank: how safe is it, after Moody's downgrade?

opinions4u

alastairq wrote: »

I note, from Robert Peston, [who, I believe, displays an undercurrent of support for the likes of Co-op?}.............that the issues of 'bad debt' that Moody's [Moonies?]...cited as the reason for the downgrade....stemmed largely from the acquisition of the Britannia Building Society?

Yes. What baffles me is why it's taken so long for those debts to go bad. I think somebody within the ethical bank has buried their head in the sand.

I...as a lay-person in the financial world, consider the failure of the Lloyds takeover to be a good thing...!

Surely a big ethical bank is better than a small one?

Mention of apparent political affiliation in the same sentence as 'ethics' is to me totally misleading.

Co-op Bank itself does not make political donations, although it's master does. Of course, we don't know how big or small the cost of the Labour Party's overdraft are.

Or, is it chagrin at the probability that Co-op BAnk's core customer base is more likely to have been found amongst the country's LAbour supporters, than from within the ranks of the Tories, or tory-wannabe's?

There may be a geographical bias.

What is of concern to me, more than a mythical credit rating...is the real possibility of all current accounts..[especially basic accounts] being subject to charges for administration?

You'll find many other threads on that topic.

Whilst this may seem a reasonable act to those of you who consider themselves to be financially well-protected, for the vast, but generally silent minority of economically poor people, having to pay for services which are actually almost totally unavoidable in our current financial society is yet another unwanted, and unnecessary burden.

In my view, every financial aspect of our lives is unavoidably tied up with the need to hold a banking account of some sort.

Our incomes cannot be paid, in cash.

Neither can many, if any, of our reasonable domestic bills.

Everything is governed and controlled via bank accounts.

BAnk charges levied on accounts solely providing basic [but essential] services would be a tax on living.

While I agree with much of that myself, the regulator doesn't.

The view is that free banking for the many is subsidised by borrowing costs to the few. I'm fine with that. The banks, generally, are fine with that. Martin Wheatley isn't.

temporary1

Thrugelmir wrote: »

Expect further downgrades on other UK banks as capital solvency requirements progressively become stricter.

And expect any UK bank that offers anything approaching a decent 1-3 year savings bond rate to savers, to suddenly, and mysteriously find that they're the wealthiest bank in Britain, super-solvent with swollen liquidity, and immediately viewed as AAA+. Of course that would mean them actually having to quickly, and responsibly, LEND and INVEST some of it out, in order to achieve the necessary MODEST returns;- which has become terribly un-bank-like behaviour these days.

Or instead they can just hold a blank demand to the government's head, and forcibly blackmail and plunder the country's public and social economies, like Gordon allowed the London Cityboy's gangster-thugs to do.

huw01

opinions4u wrote: »

Co-op Bank itself does not make political donations, although it's master does. Of course, we don't know how big or small the cost of the Labour overdraft.

Dunno how accurate, but this was quoted yesterday

http://order-order.com/2013/05/10/labour-owe-downgraded-co-op-millions/

I could do with an understanding bank manager from the co-op !

On another point I think the problem is not only the downgrade in credit rating but the scale of the downgrade. They haven't taken it down by one notch but by six notches from A3 to Ba3.

Unlike other banks, they cannot do a share issue as they're a mutual to raise funds.

pqrdef

rb10 wrote: »

Most banks' capital ratios are well ahead of the requirements.

But it's said that the regulators are going to be writing to a number of banks.

rb10 wrote: »

Co-op is in a little league of its own down at the bottom.

The paper capitalisation of a wholly-owned subsidiary seems rather arbitrary. It all depends how much money the parent is able and willing to put in if the need arises.

opinions4u

temporary1 wrote: »

And expect any UK bank that offers anything approaching a decent 1-3 year savings bond rate to savers, to suddenly, and mysteriously find that they're the wealthiest bank in Britain, super-solvent with swollen liquidity, and immediately viewed as AAA+.

More likely they'd be seen as desperate, and rather stupid for raising money by paying loss making rates.

Of course that would mean them actually having to quickly, and responsibly, LEND and INVEST some of it out, in order to achieve the necessary MODEST returns;- which has become terribly un-bank-like behaviour these days.

Except there isn't a demand for credit. Certainly not from businesses capable of repaying it.

So why raise expensive savings deposits when there's nobody to lend it to?

Thrugelmir

rb10 wrote: »

I don't think that will lead to downgrades. Most banks' capital ratios are well ahead of the requirements. Co-op is in a little league of its own down at the bottom.

Nationwide has already admitted to being under pressure.

pqrdef

Thrugelmir wrote: »

Nationwide has already admitted to being under pressure.

If somebody could broker a merger of Nationwide, Co-op, TSB and the RBS sell-off, then we'd have a bank.

It would have a lot of redundant branches though.

Hk12

Just about to take out a fixed rate mortgage with the coop and slightly concerned at recent events. Is there anything I should be worried about?

Can our mortgage rate be put up if they are bought out by smeone else?

Is our deposit safe that we put down on the house?

Is our house safe or could it be an asset that creditors can claim back?

opinions4u

Hk12 wrote: »

Just about to take out a fixed rate mortgage with the coop and slightly concerned at recent events. Is there anything I should be worried about?

Can our mortgage rate be put up if they are bought out by smeone else?

Is our deposit safe that we put down on the house?

Is our house safe or could it be an asset that creditors can claim back?

You have nothing to worry about.

JuicyJesus

Amuses me how everyone's panicking. RBS, Lloyds, Halifax etc were all in far worse shape than the Co-op currently is but they didn't fall over. Neither will the Co-op.