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Co-operative bank - downgraded to Junk
Graham_Devon
Posts: 58,560 Forumite
Could it lead to a bailout? Co-op say no. However, well respected analysts suggest any, relatively small eruption in the economy could now push it over the edge. Indeed Moody's themselves suggest taxpayer intervention could be required.
Co-op appears to be suffering from bad loans and an increase in the amount of bad loans it has on it's books. These generally come from commerical loans, and a lot of it comes from buying out Bradford and Bingley.
It's being suggested that the rest of the co-op business may have to funnel money into it's banking arm, however, being a co-operative this will be hard to achieve.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10048410/Co-op-Bank-chief-steps-down-after-Moodys-downgrades-debt-to-junk.html
Co-op appears to be suffering from bad loans and an increase in the amount of bad loans it has on it's books. These generally come from commerical loans, and a lot of it comes from buying out Bradford and Bingley.
It's being suggested that the rest of the co-op business may have to funnel money into it's banking arm, however, being a co-operative this will be hard to achieve.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10048410/Co-op-Bank-chief-steps-down-after-Moodys-downgrades-debt-to-junk.html
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Comments
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i thought the problems pertained to the buy out of the Britania?0
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i thought the problems pertained to the buy out of the Britania?
Yes, Britannia. The Bradford and Bingley was bailed out; the loan book is with UKFI.Graham_Devon wrote: »....
It's being suggested that the rest of the co-op business may have to funnel money into it's banking arm, however, being a co-operative this will be hard to achieve.
It may well come to that. But I don't see a problem. The Co-Op Bank isn't a co-operative, it's a limited company owned by a co-operative. The co-operative can simply pump in more capital if needed. The Co-Op Group has cash lying around. OK it's probably lying round with the Co-Op Bank, so it might be a case of a self imposed haircut.0 -
So did they jump the gun with Britannia? How heavily were they leaned on? Should they have waited until the Treasury was forced to hive off a bad bank, as with Dunfermline?"It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0
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So what happens when a bank becomes insolvent, if the plc (unlike NR and HBOS) is a wholly-owned subsidiary? Do the FSCS and/or the Treasury get to pick up the tab while the parent group walks away?The Co-Op Bank isn't a co-operative, it's a limited company owned by a co-operative. The co-operative can simply pump in more capital if needed."It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
Preference shares yielding 9.5%, anyone else tempted?!
“I could see that, if not actually disgruntled, he was far from being gruntled.” - P.G. Wodehouse0 -
What the hell, why not. I'll put them with the Spanish treasury bonds.Preference shares yielding 9.5%, anyone else tempted?!
Is anybody making a book? Who will take over Co-op Bank? Nationwide? Lloyds? Branson? TSB?"It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
What the hell, why not. I'll put them with the Spanish treasury bonds.
Is anybody making a book? Who will take over Co-op Bank? Nationwide? Lloyds? Branson? TSB?
You'd have to be mad to get into retail banking right now in Europe (including the UK). I certainly can't see how the 'free' banking model can survive except for deposit accounts.0 -
Is anybody making a book? Who will take over Co-op Bank? Nationwide? Lloyds? Branson? TSB?
No one will buy. The Co-Op will be closely supervised by the BOE. While actions are taken to raise capital levels to the required levels. If anything the business will contract in the short term.0 -
In November Britannia will turn into Co-op so are they both junk?0
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So did they jump the gun with Britannia? How heavily were they leaned on? Should they have waited until the Treasury was forced to hive off a bad bank, as with Dunfermline?
I don't think anyone pushed the Co-Op into the Britannia deal. I think they grabbed it with both hands thinking they were being very clever. At the time the deal was done, it was all about creating a 'super-mutual'.
Britannia and Co-operative to create £70bn 'super-mutual'
http://www.guardian.co.uk/business/2009/jan/21/britannia-cooperative-banks-building-societies
Of course, some of us with a more cynical attitude to these things, reckoned that there was no way that the Britannia would have given itself away unless it had to, and that therefore there were some nasties lurking about that had been carefully swept under the carpet.So what happens when a bank becomes insolvent, if the plc (unlike NR and HBOS) is a wholly-owned subsidiary? Do the FSCS and/or the Treasury get to pick up the tab while the parent group walks away?
Well the Co-Op could walk away if they wanted to. But that wouldn't be very 'ethical' would it?0
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