The Co-operative Banking Group has expressed its disappointment at having its credit rating downgraded to junk status.
The ratings agency, Moody's, stated it had downgraded the bank's deposit and senior debt ratings due to the risk of substantial losses in its non-core portfolio, as well as its slow progress in realising merger-related revenue and cost benefits had reduced its ability to replenish capital through earnings.
The bank maintained that, despite the downgrade, it possesses a strong funding profile and high levels of liquidity, above the regulatory requirements.
It emerged last month that the bank had pulled out of plans to purchase over 600 branches from Lloyds Banking Group as part of the Verde Business process, fuelling speculation about the strength of its capital.
The chief executive officer (CEO) of the Co-operative Banking Group, Barry Tootell, also announced today that he would be stepping down from his role. Rod Bulmer, is to become acting CEO of the Banking Group and a director of The Co-operative Bank until a permanent appointment is made.
In a statement, The Co-operative Bank said: "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.
"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."
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