The Co-operative Bank is trying to reassure its customers that it would not need a multimillion-pound taxpayer bailout after its debt was downgraded to junk status and its chief executive suddenly quit.
The move by the ratings agency Moody's to take the axe to the Manchester-based bank's credit rating followed weeks of speculation about its financial position after it posted £600m losses in March and then pulled out of a deal to buy 632 branches from Lloyds Banking Group.
Moody's warned that the bank might need "external support" – perhaps from its parent group which owns grocers, pharmacies and funeral homes – if it could not bolster its financial position. The agency cited concerns about the Co-operative incurring more losses from loans to property companies and the slow integration of the Britannia Building Society, which the Co-operative took over three years ago.
The City was stunned by the scale of the downgrade – six notches – which will raise the price at which the bank borrows on the financial markets and illustrates the speed at which the agency believes the bank's finances have deteriorated.
I am nevertheless bound to wonder why the Bank of England and its clutch of regulatory agencies failed to head off this situation at the pass. Or were they sleeping again?