The boss of The Co-operative Group, Euan Sutherland, has spoken to ITV News about the group's rescue deal for its bank.
A rescue plan for the Co-operative's troubled banking arm has been unveiled in a bid to plug a £1.5 billion hole in its balance sheet.
The C-operative Bank has insisted it does not need a taxpayer bailout after ratings agency Moody's downgraded it to 'junk' status.
The Co-op has released details of £1.5bn deal to plug hole over two years. Investors who lent them cash, not customers will take the hit.
The key thing about this first 'bail-in' for a high street bank, is the deal with the new regulator - PRA - doesn't affect the taxpayer or the customer.
If you hear 'subordinated junior bond holder' again and again today, that's the investors who lent to Co-op, whose cash will be swapped for shares.
But some of those Co-op investors may be very badly affected, could potentially be pensioners losing life savings.
The Co-operative Group has announced a plan to address the £1.5bn shortfall in capital at its bank. Group Chief Executive, Euan Sutherland, has outlined the plan on the group's YouTube channel:
The Co-operative Group has unveiled a deal with regulators that will see the co-operative plug a £1.5 billion shortfall in the balance sheet of its banking arm.
- The Bank is part of The Co-operative Group, the UK's largest consumer co-operative and includes Smile internet bank and Britannia.
- The Bank has around 5.5 million customers.
- It offers a range of financial products, including current accounts, savings accounts, credit cards and loans.
- There are over 300 branches across England, Scotland and Wales.
In light of today's news, we would like to reassure customers and members that we haven’t sought nor do we need government supportFrom @CoopBankPR on Twitter:
The Co-operative bank has issued the following statement after its recent Moody's rating agency downgrade.
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.
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.