Q&A: Co-op bank's downgrade - should I be worried?

The Co-op defended its banking business today (PA)

Should I be worried about my Co-op Bank account?

Look, nothing has really changed. The downgrade by ratings agency Moody's is about the Co-op's "problem loan ratio" which has increased from 8.1 per cent to 10.9 per cent. That doesn't mean the bank hasn't got enough money to meet its commitments. In fact it's rumoured to have cash liquidity buffer of £3bn. The bank said on Friday: "We have a strong funding profile and high levels of liquidity, which are significantly above the regulatory requirements."

So I shouldn't take my money out of the bank?

Not unless you're unhappy with the service or the accounts you have. However, there's one caveat: under the current official savings rules only £85,000 of any money you have with a regulated financial institution is protected. If an institution went bust, you'd get £85,000 through the Financial Services Compensation Scheme but no more than that. For that reason if you have more than £85,000-worth of savings it's sensible to spread the cash around different banks, just in case.

What if there's a run on the bank?

There's no reason for one. Your cash is safe. The Bank says: "We would like to reassure customers and members that we haven't sought nor do we need government support." It's also worth bearing in mind that the bank is part of the Co-operative which is a huge organisation, with assets of around £6.3bn. If the banking arm did get into difficulties, there are plenty of bits of the Co-op that could be used to raise further cash for the bank.

So I've no reason to worry?

Not really. The bank has a new boss Euan Sutherland who started last week. He'll be rolling his sleeves up and getting things in order in the coming weeks. In a statement the bank said: "We do acknowledge 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."