Friday, May 10, 2013

But but how safe are me stamps?

BBC: What does Moody's downgrade of Co-op bank mean?

"...But it makes four big points that the Co-op can't simply bat away:
1. The bank needs hundreds of millions of pounds of additional capital, to absorb potential future losses.
2. Regulators may force the bank to raise more than the £600m to £800m of capital it is set to obtain from its parent, the wider Co-op group, through the disposal of life insurance and general insurance operations.
3. The bank faces substantial further losses on poor quality loans it has made, especially property loans made by the Britannia Building Society, with which it merged in 2009.
4. In a low interest rate environment, prospects for substantial profits growth at Co-op bank are limited."
number 3 does it for me....

Posted by techieman @ 01:27 PM (2232 views)
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6 Comments

1. greenshootsandleaves said...

Like Ozzie, I find it difficult to define a poor quality property loan these days.

Friday, May 10, 2013 02:25PM Report Comment
 

2. tick tock said...

What does Moody's downgrade of Co-op bank mean?

Absolutely nothing.

Friday, May 10, 2013 05:16PM Report Comment
 

3. quiet guy said...

I have a savings account with Brittania so I had a quick rumage through my old paperwork for the merger.

From a booklet headed "Yes to a bigger, better future":

"At our Annual General Meeting on 29th April 2009, our eligble voting members chose to support the Boards's recommendation to merge with the Co-operative Financial Services.

This is good news.

Whilst it's more than fair to say these are unique times in the financial world, amid the turmoil both Britannia and The Co-operative Financial Services have been pursuing successful strategies independently and were strong in their own right.

However, we both recognised that we could be even stronger by joining forces.

the merger preserves everything that our members told us was important about Britannia:

- A member-owned organisation founded on strong ethics and values

- No external shareholders

- A business which shares its profits with members

- A business which remains committed to providing a competitive range of products and services through an extensive branch network and other channels

By coming together, we offer a unique, ethical alternative to shareholder and government owned banks.

And we'll grow to become the UK's most trusted provider of financial services."


No mention of bad property loans at all! How strange.

Friday, May 10, 2013 08:54PM Report Comment
 

4. alan said...

"But but how safe are me stamps?"
Not to worry, they will probably be bought out by one of the "too big to prosecute" banks. methinks it will all come tumbling down one day. With half the world starving and UK towns like Basildon having half of their Saturday shoppers clinically obese maybe it's time things got evened up?

Perhaps I'm watching too many episodes of the Kaiser report, but its as if the people at the top of the chain letter are getting out fast and putting their cash on a far flung (safe) island. Meanwhile, unsuspecting folk at the bottom are encouraged into debt slavery for the rest of their lives. All in the name of getting a foot on the ladder.

So, how close do you think we are to another, more serious, banking crisis?

A while back, I spoke to my mate who was responsible for passing mortgages in the Stoke area, and he felt Britannia wasn't doing badly on arrears. Obviously Moody's has a better overview....

Friday, May 10, 2013 09:33PM Report Comment
 

5. jack c said...

@ techieman - love the one liner "how safe are me stamps?"

True story my Grandmother bought a house funded from co-op stamps !

Friday, May 10, 2013 10:36PM Report Comment
 

6. quiet guy said...

There is some interesting commentary from the Telegraph about Co-op and Britannia:

http://www.telegraph.co.uk/finance/comment/telegraph-view/10050234/The-Co-op-has-opened-up-old-wounds-from-the-banking-crisis.html

Back in 2009, the Co-op made a dreadful mistake when it overpaid for the crippled Britannia Building Society, which had come unstuck making the type of poorly-judged loans on commercial property that brought down HBOS. Ever since, the Co-op has struggled to come to terms with the problems it inherited in a deal designed to create a “super mutual”.

Attention may now begin to focus on the role of regulators and auditors.

Imagine for a second that Lloyds Banking Group had only notified investors this year of the write-off costs associated with its disastrous merger with HBOS and you get an idea of the potential scandal this represents.

Saturday, May 11, 2013 12:32AM Report Comment
 

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