Fitch upgrades Co-op Bank on parent's debt issuance

Fitch Ratings on Jan. 18 upgraded Co-operative Bank PLC's long-term issuer default rating to B from B- and removed it from Rating Watch Negative, assigning a negative outlook to the rating.

The agency said the upgrade reflects its view that that the £200 million of senior debt issued in November 2020 by the U.K.-based bank's holding company parent, Co-Operative Bank Finance PLC, provides further protection for the lender's senior creditors in the event it fails.

Fitch also affirmed Co-operative Bank's B short-term issuer default rating, "b-" viability rating, 5 support rating and No Floor support rating floor, and took the short-term issuer default rating and viability rating off Rating Watch Negative.

The removal of the ratings from Rating Watch Negative was based on Fitch's view that improving economic conditions, as well as the bank's efforts to improve its structural profitability, have lessened its vulnerability to further material capital losses, the agency said.

Fitch noted, however, that the lender's need to grow and restructure its business, along with expected pressures on asset quality and capital, continues to put pressure on its ratings.