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The Co-operative Bank was last night battling to reassure millions of customers it does not need a bailout from taxpayers, after its credit rating was slashed to 'junk' status.
what it means for savers and borrowers at the bank.
What's the problem?
Co-op Bank has been given a bad score by credit-rating agency Moody's which analyses the financial stability of banks. The downgrade is due to concerns over the amount of capital it has. Moody's says the Co-op might need some financial help. This is a specific problem with Co-op Bank, which includes the old Britannia Building Society and the online bank Smile. It does not affect Cooperative Insurance Society.
How has it happened?
Co-op Bank rescued Britannia, then Britain's second biggest building society. Britannia had been struggling over bad debts on loans. The scale of these is greater than first feared. Moody's also warns that the Co-op might not make very big profits, and should raise around £750million more capital.
Does it need a bailout?
Unlikely. The Co-op says it can simply fill the gap by shuffling around cash from other bits of the business. Its parent group is huge, with assets of £82billion and almost £7billion in cash.
Is my Co-op savings account at risk?
All savings in UK banks and building societies are protected up to £85,000. If a bank goes bust then savers get back their money through the Financial Services Compensation Scheme within seven days. The Co-op's savings and current accounts, savings accounts with Britannia, and customers with Smile are all covered by the same banking licence. This means a total of £85,000 across these brands is protected. Joint account holders get £85,000 each.Unless something changes, the Co-op says the bank is safe and there is no need to worry about needing this protection.
Read more here
what it means for savers and borrowers at the bank.
What's the problem?
Co-op Bank has been given a bad score by credit-rating agency Moody's which analyses the financial stability of banks. The downgrade is due to concerns over the amount of capital it has. Moody's says the Co-op might need some financial help. This is a specific problem with Co-op Bank, which includes the old Britannia Building Society and the online bank Smile. It does not affect Cooperative Insurance Society.
How has it happened?
Co-op Bank rescued Britannia, then Britain's second biggest building society. Britannia had been struggling over bad debts on loans. The scale of these is greater than first feared. Moody's also warns that the Co-op might not make very big profits, and should raise around £750million more capital.
Does it need a bailout?
Unlikely. The Co-op says it can simply fill the gap by shuffling around cash from other bits of the business. Its parent group is huge, with assets of £82billion and almost £7billion in cash.
Is my Co-op savings account at risk?
All savings in UK banks and building societies are protected up to £85,000. If a bank goes bust then savers get back their money through the Financial Services Compensation Scheme within seven days. The Co-op's savings and current accounts, savings accounts with Britannia, and customers with Smile are all covered by the same banking licence. This means a total of £85,000 across these brands is protected. Joint account holders get £85,000 each.Unless something changes, the Co-op says the bank is safe and there is no need to worry about needing this protection.
Read more here