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

pooch

The Co-operative Bank has today stopped offering new business loans amid concerns over its capital position.

"With this decision the Co-op confirms that they have a serious capital deficiency which could be very difficult for them to solve with the business intact," said Eva Olsson, an analyst at Mistubishi UFJ Securities.

http://www.bbc.co.uk/news/business-22651713

Lending to individual retail customers is currently unaffected

1jim

Saw that, lots of little snippets coming out about coop bank, all adding up to something a little bigger than I'd like as a long standing customer of smile .

There may be nothing to worry about in terms of going bust etc but there is a risk of pulling out of the market and selling to someone else. I'm going to keep a close eye on this and will probably have a low threshold for moving accounts elsewhere as they really aren't giving me any reason to stay

ColdIron

I wonder about the people that queued up for their recent 1 year fix at 2.3%. Their deposit should be safe enough but I can't help thinking I'd sleep better knowing it was somewhere else

rb10

ColdIron wrote: »

I wonder about the people that queued up for their recent 1 year fix at 2.3%. Their deposit should be safe enough but I can't help thinking I'd sleep better knowing it was somewhere else

They only have anything to worry about if the deposit (plus accrued interest plus balance of any other Co-op accounts) is greater than £85k.

Otherwise, no problem, whatever happens.

ColdIron

Yeah rb10 I'm well aware of that, I guess my point was that given a choice of the Co-op and, oh I dunno, Aldermore, I'd be more relaxed if my ears weren't pricking up at every bit of news leaking out. Paying a table topping interest rate probably doesn't help them either. I guess they needed the cash

realaledrinker

The Co-op take the first steps to repairing their balance sheet by pulling back on corporate lending, which means over time that they will need to hold proportionately less capital as a buffer against default. And thereby reduce their risk profile. Then they get slagged off for it. :wall:

1jim

I'm not slagging them off, I'm concerned about their long term intentions to continue in the banking sector. And yes, I'm well aware that they have said they plan to continue in banking, but they would say that wouldn't they, right up until they announce any sale, transfer or closure. We know they are losing money, are having a review, and now stoping lending to business to ensure they have the reserves they were supposed to have all along... Doesn't give me confidence in the management or long term aspirations of the company

opinions4u

1jim wrote: »

I'm not slagging them off, I'm concerned about their long term intentions to continue in the banking sector. And yes, I'm well aware that they have said they plan to continue in banking, but they would say that wouldn't they, right up until they announce any sale, transfer or closure. We know they are losing money, are having a review, and now stoping lending to business to ensure they have the reserves they were supposed to have all along... Doesn't give me confidence in the management or long term aspirations of the company

Just for clarity, they have not stopped lending to business. They will continue to lend, including new lines of credit.

They've just stopped taking on new business clients.

There's a big difference.

1jim

opinions4u wrote: »

Just for clarity, they have not stopped lending to business. They will continue to lend, including new lines of credit.

They've just stopped taking on new business clients.

There's a big difference.

You are correct, I stand corrected

But my overall, and growing concern about the general future of the coop bank remains unchanged by this

southcoastsounds

Can anyone tell me how safe my Co-op 2 year investment bond is? It matures in August 2013. I understand that this is classed as a "term deposit savings account" and may not be covered by the government's guarantee scheme.

Thanks in anticipation.