UK co-op bank halts loans to customers
London, May 25, 2013
The co-operative bank has stopped offering loans to new business customers, part of measures designed to quell growing concerns over its capital position.
The bank's parent, the Co-operative Group, said yesterday it was undertaking an extensive review of the bank, examining its capital and lending position and its commercial strategy.
Credit ratings agency Moody's downgraded Co-op Bank's debt ratings earlier in May and warned it could need taxpayers' money to plug a capital shortfall which some analysts have said could be as high as £1.8 billion ($2.7 billion).
The Co-op said it took a decision in March that it would not look for new corporate lending business and would concentrate instead on serving individual retail customers.
"This decision is part of our commercial strategy to play to the traditional strengths of the bank. It will enable us to focus our energies and capital on both supporting our existing corporate customers and on growing our presence in the retail banking market," said chief executive Euan Sutherland.
Sutherland, who only took up his position this month, has the task of convincing Britain's financial regulator that the bank's capital position is strong enough.
The financial regulator said in March that British banks must raise £25bn of extra capital by the end of the year to absorb any future losses on loans.