Co-Op Bank given breathing space on capital requirements by Bank of England body Prudential Regulation Authority
The Bank of England's Prudential Regulation Authority (PRA) has said the Co-Operative Bank does not need to issue more debt to cover its capital requirements this year.
The Co-Op Bank was the only UK lender to fail the BoE's stress tests last year. The minimum capital ratio needed to pass the test was 4.5 per cent; the Co-Op was left with -2.6 per cent.
In May, it said it was on track to meet the targets, having completed a £1.5bn residential mortgage securitisation. At the time chief executive Niall Booker warned that there was "considerable work" left to do and that the bank was "exposed to macroeconomic conditions" such as interest rate rises.
More recently the bank also narrowly avoided a £120m fine for "serious and wide-ranging failings" because the PRA and BoE were concerned it would harm the lender's safety and soundness.
Despite this, concerns remain about the bank's vulnerability to outside factors.
Chief executive Niall Booker said while "steady progress" had been made, there were still challenges ahead.
"Notwithstanding the progress noted above, the bank remains exposed to external macroeconomic conditions and there is still considerable work ahead to fully implement the turnaround plan," he added.
The bank is expected to restart its issuance programme in the first half of 2016, with a benchmark sterling transaction designed to qualify as MREL.