CEO quits after Moody’s downgrades Co-op
In a statement The Co-op said: “Barry Tootell, chief executive office of The Co-operative Banking Group, has chosen to step down from the business and from the board of The Co-operative Bank.
“His responsibilities will be assumed with immediate effect by Rod Bulmer, who becomes acting chief executive officer of the group and a director of The Co-operative Bank until a permanent replacement is announced in due course.”
Tootell took over the role of chief executive to lead the banking business through the potential acquisition of the Lloyds Banking Group Verde Business.
However last month The Co-op withdrew from discussions as it said it no longer believed the acquisition was in the best interests of the group’s members.
Tootell’s resignation was preceded by an announcement from credit agency Moody’s which has taken the decision to downgrade The Co-operative’s debt rating to “junk” status.
Moody’s warned that the bank could need “external support” if it does not strengthen its balance sheet.
The bank said it was disappointed by the downgrade but did acknowledge the need to strengthen its capital position.
In its statement The Co-operative said: “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.”
In March the bank reported annual losses of £674m for 2012 and announced the sale of its life business to Royal London and its intention to sell its general insurance business.
The statement continued: “In addition to these measures we plan to significantly simplify our business which will greatly improve our operational effectiveness and also enhance our capital position in the process.
“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.”
The majority of The Co-operative’s debt issues relate to its acquisition of The Britannia Building Society in 2009.
Moody’s said The Co-op had underestimated the risks of the Britannia acquisition which brought an increased exposure to commercial property.