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Co-op halts business lending

Date Added: 28/05/2013  

The Co-operative Bank has announced it is not going to be taking on any new corporate clients after a review of its operations.

Business lending to firms could be hit even further as a result of the decision, which comes as the bank's appointment of new Co-op Group chief executive Euan Sutherland.

Credit ratings agency Moody's recently downgraded the bank to junk status, which had the impact of forcing it to issue a statement that it would not need to be rescued by the taxpayer.

A statement from Co-op Bank explained that a review of the financier, its capital and lending position and its commercial strategy led to the decision not to take on any more corporate customers for the time being.

Firms might need to take company debt advice if they are unable to access the loans they need to secure the short-term future of the business. Despite the government launching the Funding for Lending Scheme last year, loans to companies have actually been falling in the last year.

"An early decision was to confirm the primary focus of the banking business is to be directed at serving and expanding our presence among retail customers while continuing to support our existing business customers," said the statement from the Co-op. It stressed the move is in line with the organisation's choice to "focus our energies and capital on these sectors of the market and would not, at this time, grow our corporate lending business".

After Moody's downgraded the credit rating of the bank recently, it stated it currently has a strong funding profile and high levels of liquidity, which it pointed out are significantly above the regulatory requirements.

The Confederation of British Industry recently called for firms to look into alternative business lending methods as a result of the lack of available loans from high street banks.

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Posted by Julie Cutts

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