Julian Knight: It's full stop at the Co-op as banking plans come apart

And now the 'super-mutual' faces struggle to survive as a mutual at all after downgrading

Personal Finance Editor

Make no bones about it, the down- grading of the Co-op Bank by credit agency Moody's and sudden departure of its chief executive Barry Tootell is serious.

The "super-mutual", as it has been dubbed, is about to enter one of the most difficult periods in its long and distinguished history.

Clearly the departure of the chief executive is a damning indictment of his business strategy, which was to take advantage of the Co-op brand and the weakness of the building society sector and grow the group into a rival to the other mutual behemoth Nationwide.

But the warning from Moody's that the Co-op Bank may need more capital shows that Icarus-like Tootell and his team have tried to soar too high. I don't know the ins and outs of the Co-op's balance sheet but the fact that it is Moody's that has downgraded brings me up short, as out of all the credit agencies they have the reputation of being very cautious.

The problem for the Co-op though seems pretty clear - the swallowing of the Britannia building society and its loan book seems more difficult than first thought.

The economy is of course sluggish – but this hasn't stopped some banks doing very nicely thank you – and amongst Co-op customers, who tend to be slightly lower- income than the likes of say HSBC, there is a seemingly steady and interminable financial squeeze on.

For a long time in the UK, savers have been subsidising borrowers – to the tune of £100bn-plus since the financial crisis broke – but those with debts have still been unable to pay down their borrowings.

They are hanging around necks and I believe that this applies disproportionately to Co-op customers, hence Moody's warning on the balance sheet.

So if you are a Co-op Bank customer should you be worried?

Well firstly your money is safe, as deposits are protected to the tune of the first £85,000. In fact protection has been improved since the run on Northern Rock in 2007. So there is no need to turn up at your branch with savings book in hand.

However, longer term the Co-op will have to change course and perhaps even change ownership. In recent weeks the financial squeeze has led to it pulling out of buying 600-plus branches of Lloyds TSB.

It is safe to say that at the very least the bid to become one of Britain's major banking players is at an end for the Co-op.

The question isn't whether it can live up to its "super-mutual" status, rather whether it can remain a mutual at all. I said it was serious.

A bonzer idea from Brussels

I was very interested to see Sheila's Wheels post some bonzer numbers this week. It seems the death of female-focused insurers at the hands of the EU gender directive was well and truly exaggerated.

The self-proclaimed "pinkest, most sequined" brand on the block has 95 per cent female drivers, despite no insurer being allowed to offer discounts to drivers on the grounds of gender alone any more.

In what is clearly a victory of brand over reality, though, Sheila's is celebrating because in the main female drivers have fewer and less costly accidents than men.

As a result, Sheila's has the freedom to charge more than it used to – due to not being allowed to offer a discount for gender – for exactly the same service and extra profitability is entirely imposed on them because of the EU rule.

For Sheila's Wheels and other female-focused insurers the EU bureaucrats may have proved a bit of a boon for once.

Keep on cracking down

Police have raided premises in London and broken up a suspected pension unlocking or "liberation" scam, cold calling pension holders with fraudulent offers that could lead to them being fleeced.

This underground industry, believed to be worth £400m a year, puts the pension cash in very high-risk or non-existent investments, leaving victims destitute.

It's thoroughly unpleasant and it's good to see a firm line being taken. Let's hope it is the shape of things to come.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

peopleMathematician John Nash inspired the film Beautiful Mind
Richard Blair is concerned the trenches are falling into disrepair
newsGeorge Orwell's son wants to save war site that inspired book
Life and Style
Audrey Hepburn with Hubert De Givenchy, whose well-cut black tuxedo is a 'timeless look'
fashionIt may be a paradox, but the industry loves it
Arts and Entertainment
The pair in their heyday in 1967
Life and Style
fashionFrom bathing dresses in the twenties to modern bikinis
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Guru Careers: Software Developer / C# Developer

    £40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

    Neil Pavier: Management Accountant

    £45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

    Sheridan Maine: Commercial Accountant

    £45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

    Laura Norton: Project Accountant

    £50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

    Day In a Page

    Abuse - and the hell that came afterwards

    Abuse - and the hell that follows

    James Rhodes on the extraordinary legal battle to publish his memoir
    Why we need a 'tranquility map' of England, according to campaigners

    It's oh so quiet!

    The case for a 'tranquility map' of England
    'Timeless fashion': It may be a paradox, but the industry loves it

    'Timeless fashion'

    It may be a paradox, but the industry loves it
    If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

    Could have done with Osama bin Laden staying alive?

    Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
    New exhibition celebrates the evolution of swimwear

    Evolution of swimwear

    From bathing dresses in the twenties to modern bikinis
    Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

    Sun, sex and an anthropological study

    One academic’s summer of hell in Magaluf
    From Shakespeare to Rising Damp... to Vicious

    Frances de la Tour's 50-year triumph

    'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
    'That Whitsun, I was late getting away...'

    Ian McMillan on the Whitsun Weddings

    This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
    Kathryn Williams explores the works and influences of Sylvia Plath in a new light

    Songs from the bell jar

    Kathryn Williams explores the works and influences of Sylvia Plath
    How one man's day in high heels showed him that Cannes must change its 'no flats' policy

    One man's day in high heels

    ...showed him that Cannes must change its 'flats' policy
    Is a quiet crusade to reform executive pay bearing fruit?

    Is a quiet crusade to reform executive pay bearing fruit?

    Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
    The King David Hotel gives precious work to Palestinians - unless peace talks are on

    King David Hotel: Palestinians not included

    The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
    More people moving from Australia to New Zealand than in the other direction for first time in 24 years

    End of the Aussie brain drain

    More people moving from Australia to New Zealand than in the other direction for first time in 24 years
    Meditation is touted as a cure for mental instability but can it actually be bad for you?

    Can meditation be bad for you?

    Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
    Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

    Australia's first-ever Eurovision entrant

    Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine