Co-operative Bank is being urged to dispose of risky assets after failing a recent Bank of England stress test, although the bank has noted the tests were on its balance sheet at the end of last year and failed to take into account work already done to improve its position.
The bank has a
£7.1 billion closed book of bad home loans, Optimum, acquired as a result of its merger with Britannia, but any sale would depend on market conditions. The bank notes uncertainty ahead of next year’s general election could act as a deterrent.
And while the bank has been competitive on mortgage lending, Ray Boulger, a technical analyst at John Charcol, notes competition is strong and margins lower in the fixed-rate, lower loan to value market.
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