Ratings agency Moody’s has lowered the Co-op Bank’s credit rating to junk, citing worries that it could be vulnerable to losses.
The credit agency said the bank could require support if it was not able to strengthen its balance sheet.
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The Co-operative Banking Group issued the following response to the rating downgrade:
"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."
The bank added that it has a plan to "strengthen its capital position in light of the broader economic downturn and the pending introduction of enhanced regulatory requirements".
These plans include selling off its life and general insurance businesses, and simplifying its operations.
According to Moody’s the banks "problem loan ratio" rose to 10.9% in 2012, up from 8.1% in 2011, reflecting a deterioration in its commercial property portfolio.
In March, the Co-op Bank reported annual losses of £674m for 2012.
The Co-op Bank acquired Britannia in 2009, inheriting the building societies bad loans.
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