The Co-operative Bank was forced to reassure customers it has not sought Government help as the sudden departure of its chief executive compounded fears over its stability.

The lender, which is part of the Co-operative Group, announced that Barry Tootell had “chosen to step down” with immediate effect, a day after the bank’s credit was downgraded to junk status by Moody’s. Mr Tootell was said to have “decided that the time was right to stand down” because he had been running the “Verde” deal to buy 632 branches from Lloyds Banking Group which collapsed last month. The bank announced that he would be temporarily replaced by Rod Bulmer, the Co-op executive who had been driving Verde day to day.

The resignation added to a sense of crisis after Moody’s said the bank’s capital levels were too low and had been made worse by “substantial losses”, particularly in commercial property loans it acquired with Britannia Building Society in 2009. The credit rating agency said the lender was “unlikely to be able to generate a significant amount of capital through earnings” so it would have to seek “external” help. Amid fears of another state bail out, the Co-op took to Twitter to reassure customers. “In light of today’s news, we would like to reassure customers and members that we haven’t sought nor do we need government support,” it said. In another tweet a few hours later, it said: “We have a strong funding profile & high levels of liquidity. We’d also like to reassure you that we [are] not seeking Government support.”....Read more here