Co-operative Bank loses £709m | Business | The Guardian Co-operative Bank loses £709m Corporate loans acquired with Co-op Bank's disastrous takeover of Britannia Building Society in 2009 continue to deteriorate Co-operative Bank has posted steep losses for 2013 so far. Photograph: John Stillwell/PA Press Association Thursday 29 August 2013 05.04 EDT First published on Thursday 29 August 2013 05.04 EDT Close This article is 3 years old The Co-operative Group has plunged to a £559m first-half loss as bad debts in its banking arm wiped out profits from its supermarkets. The group said there would be no quick fixes as it embarked on a four-year turnaround plan, after reporting pre-tax losses of £709.4m in the Co-operative Bank in the six months to the end of June. The Prudential Regulation Authority (PRA) , the City regulator, said the scale of the losses did not alter its demand that the Co-op plug the £1.5bn hole in its balance sheet.

The Co-op, which employs more than 100,000 people, warned of job losses as it restructures the wider group as well as the bank - but did not say how many staff will go. New boss Euan Sutherland said: "It's inevitable in a restructuring of this size that there will be some jobs at risk." He said the Co-op has "no plan B" for rescuing its bank, as it finalises plans to inject £1.5bn into the embattled division. Bondholders ranging from pensioners to hedge funds will have to take a loss on their investment under plans for a "bail-in" in coming months. They will be forced to contribute £500 m through an "exchange offer", which will result in a stock market listing for the bank. The Co-op will inject £1bn itself into the bank. The bank, which employs about 10,000 staff, slashed the value of its loans by £496m, as corporate loans acquired with its disastrous takeover of Britannia Building Society in 2009 continue to deteriorate.

It also wrote down almost £150m on a new IT system, which had been planned by former management. And the bank booked another £61m to cover the cost of previous misconduct – including £25m for mis-sold payment protection insurance, £26m for credit card and identity theft protection and £10m for mis-sold interest rate swaps. The bank's £709.4m losses compare with £59m losses a year earlier, while at group level, the losses compare with £18m of profits in the first half of 2012. Sutherland, who replaced former boss Peter Marks in May, said: "We are sorry but we are a new team and grasping the nettle and getting on with fixing the situation." He said while there has been a small trickle of deposits leaving the bank, customers have largely been loyal. The PRA said it factored in the scale of the losses when it signed off the Co-op's turnaround plan in June. It said: "The Prudential Regulation Authority anticipated the likely scale and source of these losses when it made its assessment of the bank's capital position in June.

"Consequently, the announcement today does not affect the PRA's assessment that the Co-operative Bank has a capital shortfall of £1.5bn relative to 7% core equity capital after adjustments." Profits in the food arm, which is the UK's fifth-biggest grocer with more than 2,700 supermarkets and convenience stores, dipped to £117.4m from £119m a year earlier in a "challenging market". The Co-op said it expects a better second half from the retailer, as a turnaround focusing on better stock availability and store refits gathers pace. Operating profits in its pharmacy business dipped to £14.3m from £16.1m a year earlier as it was hit by government funding cuts to medicines. But profits in its funeralcare arm advanced 15% to £41.8m.

Neville Richardson counters regulator's claims that Co-op's problems stemmed from bad debts on loans by Britannia building society Published: 4 Sep 2013 Britannia and Co-operative to create £70bn 'super-mutual' | Business | The Guardian Britannia and Co-operative to create £70bn 'super-mutual' Wednesday 21 January 2009 12.55 EST First published on Wednesday 21 January 2009 12.55 EST Close This article is 7 years old Britannia building society and the Co-operative's financial arm yesterday agreed a £70bn "super-mutual" merger with the financial muscle to acquire other societies and insurers in the first new-model institution to emerge out of the rubble of the credit crisis. The deal takes advantage of new legislation that is likely to spark sweeping consolidation among Britain's 55 building societies, 33 mutual insurers and 70 friendly societies. It could also pave the way for an extraordinary revival of the mutual sector just a decade after Halifax, Alliance & Leicester and Bradford & Bingley demutualised but ultimately failed to survive.

Both Britannia and Co-operative Financial Services (CFS) insist they have weathered the credit crisis better than stockmarket-quoted companies and are now in a position to use provisions under the new Butterfill bill to acquire other mutuals across the financial sector. Neville Richardson, the chief executive of Britannia who will take charge of the combined business, said: "Britannia did not need to do this deal. Both organisations could have had a strong future independently. This is an historic opportunity to help create a new way of doing business in British financial services." Combining Britannia and CFS will ­create a business with nine million customers, 12,000 employees and 300 branches. At its core is a "cultural fit" of two organisations that claim to be an ethical alternative to shareholder-based groups. Unions welcomed a commitment to making no compulsory redundancies in the branch network, but Richardson said that some head office positions were likely to go as part of a plan to cut annual costs by £60m within three years. The deal will disappoint any carpetbaggers with lingering hopes of a windfall from holding a Britannia account. There would be no payouts for members of either group, said Richardson.

"We definitely regard this as a merger of equals," he said. Both brands will remain in place for the next couple of years, although Richardson said the intention was to "move to a single brand over time". But the society's sponsorship of Premier League club Stoke City, which plays at the Britannia Stadium, is not under threat. "We have had a great relationship with Stoke City and we'd like it to continue," said Richardson. Britannia has not sidestepped the mortgage market's woes entirely. Around 25% of its mortgage lending is non-traditional business such as sub-prime, self-certification loans and buy-to-let, much of it through its Platform Home Loans subsidiary. It said 2008 results would be affected by exposure to two banks that failed during the year, but it remained profitable and provisions would not have a significant impact on its capital and liquidity position. CFS has only recently emerged from a rocky restructuring that saw thousands made redundant after it closed its door-to-door insurance business. Its operations now consist of the Co-operative Bank, the only high street bank with a customer-led ethical policy, an insurance business centred on car policies, and an investments arm that focuses on green and ethical funds.

The merger announcement comes just 48 hours after statutory instruments were laid in parliament to bring forward the Butterfill bill, which is expected to become law in March. Until now building societies could merge with each other but not with mutual insurers or friendly societies. Butterfill gives the go-ahead for consolidation across the sector, and Britannia/CFS said yesterday it would be examining opportunities as they arose. David Anderson, CFS chief executive who will leave the business after the merger, said: "I think the new legislation creates an interesting new pathway for mutuals of different kinds to get together. There will be more interest in organisations of different kinds." In December last year Nationwide took over both the Derbyshire and Cheshire building societies, while the Catholic merged with the Chelsea, and Yorkshire building society took over Barnsley. A further merger between Skipton and Scarborough building societies is also in the process of going through. Ray Boulger, senior technical manager at John Charcol, said: "It is inevitable that there will be more mergers.

In the current environment some societies will be coming under pressure." Richardson said the financial strength of the combined group may enable it to increase its mortgage lending, but held out little prospect of a swift return to 90%-plus lending. Following concerns about the declining bee population The co-operative began campaigning on bees in January 2009 The Co-operative's Plan Bee at a glance The Co-operative launched Plan Bee in January 2009 to highlight and tackle the demise of the honeybee The campaign incorporated several carefully-targeted media activities, including giving away more than 600,000 free packets of wildflower seeds through national newspapers to increase the amount of wildflowers in UK gardens An independent media evaluation company valued media coverage of Plan Bee in 2009 at £1.9 million The Co-operative has funded new scientific research into the effects of pesticides on bees and to map colonies of native British bee species that are believed to be better suited to the UK climate The Co-operative launched urban beekeeping projects in Manchester, London, Inverness and Sheffield to train new beekeepers to keep hives in urban parks and allotments.

As a result of the pilot there are 3 million more bees in Manchester The Co-operative’s own farms now play host to 850 hives – home to more than 42 million honeybees – and research is underway to develop the best mix of wildflowers to grow in field margins Background The Co-operative Group completed the acquisition of Somerfield in March 2009 and its financial services business merged with the Britannia Building Society in August 2009. A major work programme followed to ensure that these businesses implemented The Co-operative’s environmental standards. For example, all Co-operative Food environmental policies (such as sustainable sourcing of fish or wood and paper products) now apply to Somerfield and The Co-operative Bank’s Ethical Policy (for example the practice of not investing in fossil fuel extraction or production) applies to all Britannia’s corporate customers. In addition, The Co-operative has a history of campaigning on environmental issues, for example the recent Marine Reserves Now campaign with the Marine Conservation Society, and The Wave, where The Co-operative mobilised 2,500 of its members to take part in a climate change march in London.

How the issue was tackled Following concerns about the declining bee population The Co-operative began campaigning on bees in January 2009. By pollinating more than 90 different crops, honeybees help to produce a third of the food we eat and contribute £200 million to the UK economy. Worryingly, however, honeybee numbers have gone into steep decline in recent years. In the UK alone their numbers have halved since 1985. Experts have warned that in the event of a large-scale loss of bees, we would have a vastly less varied diet and that available food would become more expensive. As a major food retailer and the UK’s largest farmer, The Co-operative recognised that a failure to address this problem could have serious implications for its business and society at large. So, in 2009, it launched ‘Plan Bee’ in an effort to both understand why the bee population was in decline and to inform the public about the issue and encourage them to help to address it.

Plan Bee is focused on four main areas: taking action on The Co-operative’s own farms; investing in new scientific research into bee population decline; helping members and customers take action; and highlighting how the use of certain pesticides may be linked to the decline in honeybee numbers. Benefits and impacts To achieve the goals of the initiative, a team of 30 people spanning several departments within The Co-operative was established to implement Plan Bee. Over the course of five months, this working group planned the project and secured the initial £250,000 funding required for a series of activities scheduled to take place over three years from January 2009. Since then a further £290,000 of funds has been secured for additional activities, taking the total investment behind the campaign to more than £500,000. Plan Bee was launched in February 2009 at 40 membership events across the UK, which were then followed by a series of carefully targeted activities. One major initiative saw The Co-operative give away more than 600,000 free packets of wildflower seeds via the News of the World and Sun newspapers.

It was hoped this would help create a significant increase in the amount of wildflowers in UK gardens, providing essential additional nutrition for bees up and down the country. The Co-operative has commissioned new scientific research including mapping the locations of native British black bees, believed to be better suited to the UK climate and an investigating the effects of neonicotinoid pesticides on bees, which have been linked to bee declines elsewhere in Europe. Meanwhile, to raise awareness of the decline in bee numbers and the Plan Bee campaign, The Co-operative campaign team developed a website with feeds to leading social networking sites such as Facebook and Twitter, where the campaign has attracted more than 6,200 followers. Thanks to these and many other initiatives, independent media evaluation company Mantra valued the total broadcast and print media coverage of Plan Bee at £1.9 million in 2009. On a practical level, the Plan Bee campaign launched urban beekeeper projects in Manchester, London, Inverness and Sheffield, which provide training and a basic start-up kit to new beekeepers. As a result of the pilot urban beekeepers project, there are three million more bees in Manchester. The Co-operative is playing its part, too.

On its own farms it now has 850 hives, which are home to 42 million bees, is researching the best mix to support honeybees on its land and an area of nearly 10km2 of farmland has already been planted with wildflowers to provide a habitat to enable bees to thrive. Moody's downgrades U.K.'s Co-operative bank Moody's downgrades U.K.'s Co-operative bank DANICA KIRKA Pin it Share LONDON (AP) — The Co-operative Bank on Friday sought to reassure its customers that it didn't need a government bailout after Moody's Investors Service downgraded the U.K. lender's debt ratings to "junk" status. Concerns about the bank's credit status had been rising since it pulled out of a deal to buy some 630 branches from another U.K. lender, Lloyds Bank.

The ratings agency said late Thursday that the Co-operative Bank's problems stemmed from the 2009 acquisition of Britannia Building Society, arguing that the bank failed to properly assess the losses that the portfolio would experience, with its problem loan ratio increasing to 10.9 percent by the end of 2012, from 8.1 percent in 2011. The Co-operative Bank is owned by the Co-op Group, Britain's biggest mutual business which is owned by individuals and includes supermarkets, funeral services and pharmacies. It has 340 branches and 1.5 million current account holders. The bank, which has 30 billion pounds ($46.5 billion) in assets, moved immediately to try to quash public concerns, saying in a statement that it is disappointed by the ratings downgrade, but that it has a strong funding profile and high levels of liquidity. "In light of today's news, we would like to reassure customers and members that we haven't sought, nor do we need, government support," it said in a tweet posted on the group's account.

Britain is still struggling from the impact of government bailouts to Royal Bank of Scotland and Lloyds, which were rescued during the height of the 2008 financial crisis. The banks' CEO, Barry Tootell, also resigned Friday, a day after the downgrade. But the bank insisted the decision was an unfortunate coincidence, and a statement on his resignation made no note of Moody's action. Tootell had been in charge of the aborted Lloyds deal. "Barry took over the role of CEO to lead the banking business through the potential acquisition of the Lloyds Banking Group Verde Business," the company said in a statement. "Following the recent decision by The Co-operative Group and Banking Group Boards to withdraw from the Verde process, Barry has decided that the time is now right for him to stand down from his role." The Prudential Regulation Authority, Britain's banking regulator, declined to comment on an individual bank. But the authority is expected to tell banks to increase their capital cushion. Bank analyst Ian Gordon of Investec said Co-operative is more weakly capitalized than its listed peers.

"On the face of it, it may require capital support from its parent and, as Moody's observed, that may or may not be forthcoming," he wrote in an email. "Aside from that, one would imagine that accelerated balance sheet shrinkage will be the chosen medicine. In this context it is little surprise that it walked away from the Lloyds/Verde deal." Reblog Co-op struggles continue with Somerfield takeover | The Independent Co-op struggles continue with Somerfield takeover Tuesday 28 February 2012 00:00 BST Click to follow The Independent Online The Co-operative Group's food division is suffering a trading crisis in the Somerfield stores that it acquired nearly three years ago in a £1.6bn deal. Documents seen by The Independent also reveal the Co-operative's food business is battling soaring complaints in its stores, including overcharging customers due to misleading information. The damning revelations about the UK's fifth-biggest grocer come after it unveiled up to 280 redundancies last week. These are largely at its head office in Manchester, with none in stores.

The former Somerfield stores posted a 3.38 per cent fall in like-for-like food sales over the eight weeks to 25 February, compared with a rise of 0.13 per cent at the Co-operative's own grocery shops, according to a memo. Total sales at the Co-op's food business, excluding fuel, are already £15.55m below budget, just eight weeks into its new financial year that started in early January. The mutual business has converted all of the 650-plus Somerfield shops to its Co-operative branding but continues to use data on both in internal documents. The figures will further reinforce the view that its troubles in integrating Somerfield into the group are far from over, with sources citing the Co-op's failure to get the right ranges into the acquired stores. Following reports emerging in April 2010 about Somerfield trading woes, the ongoing problems will intensify the pressure on Peter Marks, the chief executive of the group, which acquired the Britannia building society in 2009.

The group, which has more than 4,800 retail trading outlets across pharmacy, banking and funeral care, was also given preferred-bidder status in December to acquire 632 branches of Lloyds Banking Group. Data on customer complaints also makes for grim reading at the Co-op's 3,000-store food business. The number of complaints rose to 447 in the sixth week of its financial year, up from the 333 recorded in week three. The documents say that "staff attitude complaints continue to be in the 100s" each week, with swearing, overcharging and food safety concerns also cited. The grocer has 20 million weekly transactions. The latest memo refers to "general rudeness of staff – no eye contact, no please or thank you, talking to colleagues, not asking for membership cards, queues and overcharging". The Co-op declined to comment. A source said that complaints are rising as the Co-operative is going through so much change. Up to 280 food job will be cut across functions, including central operations, IT and finance, as well as field-based loss prevention teams.

In a memo, the Co-op said that no staff will receive less than 2 weeks' pay, in addition to payment for their notice period. More about: Moody's downgrades Co-operative Bank; on review for further downgrade Moody's downgrades Co-operative Bank; on review for further downgrade Global Credit Research - 09 May 2013 Baseline credit assessment lowered to b1 London, 09 May 2013 -- Moody's Investors Service has today downgraded the deposit and senior debt ratings of Co-operative Bank plc to Ba3/Not Prime from A3/Prime 2, following its lowering of the bank's baseline credit assessment (BCA) to b1 from baa1. The equivalent standalone bank financial strength rating (BFSR) is now E+ from C- previously.

The lowering of the BCA reflects Moody's opinion that (1) the bank faces the risk of further substantial losses in its non-core portfolio, as demonstrated recently by the unexpectedly significant deterioration of its commercial real estate (CRE) exposures, that will exert downward pressure on capital ratios that are already low relative to its peers'; (2) its vulnerability to losses is heightened by the low level of provisions held against its lending portfolio; and (3) the bank's slow progress in realising merger-related revenue and cost benefits has diminished its ability to replenish capital through earnings. Together, these imply a risk of write-downs on junior debt instruments and, potentially, the need for external support to maintain regulatory capital levels. These risks are incompatible with a BCA above the 'b' category. Consistent with the lower b1 BCA, Moody's downgraded the ratings of the bank's subordinated and junior subordinated debt to B2 and B3 (hyb), respectively, from Baa2 and Baa3 (hyb).

Moody's is maintaining the one notch uplift from the BCA that it incorporates into the deposit and senior debt ratings reflecting the assumption of a moderate potential for systemic support likely to be forthcoming from the UK authorities in the event of need for a medium-sized institution such as Co-operative Bank. Moody's has also extended the review for downgrade -- initiated on 30 July 2012 -- on all the bank's long-term ratings and BFSR. The review for further downgrade will allow Moody's to examine the effectiveness of the bank's plan to strengthen its capital structure, improve profitability and reduce its cost base once the full implications of the Prudential Regulatory Authority (PRA) review are known by the bank, which is not expected until end-May 2013. RATINGS RATIONALE The lowering of the BCA to b1 reflects Moody's view that the bank's 2012 revaluation of its risk exposures announced in March indicates that the significant deterioration in the credit quality of the bank's non-core portfolio has exceeded the bank's expectations and that its earlier valuation reserves and provisions built against these risks may well be inadequate.

Most of these risks stem from the legacy portfolio of Britannia Building Society, which the Co-operative Bank acquired in 2009. Moody's believes that the bank underestimated the risks of that acquisition, especially against the backdrop of the continued weak economic environment. Moreover, the bank's ability to generate the earnings needed to replenish capital, if higher losses materialise, is diminished by its slow progress in realising merger-related revenue and cost benefits. Moody's believes that the combination of (1) low capital levels; (2) a low problem-loan coverage ratio relative to other UK banks; and (3) weak internal capital-generation capacity suggests that the bank's capacity to absorb future losses is now too low to support an investment grade rating and that it possesses only speculative standalone strength, subject to high credit risk in the absence of extraordinary external support. The ratings assigned to the bank's subordinated and junior subordinated debt reflect the possibility that losses may be imposed on holders of these securities in order to achieve the capitalisation levels that the UK regulators require.

--- CAPITAL LEVELS ARE LOW, RELATIVE TO THOSE OF ITS PEERS The bank reported a Basel 2.5 Core Tier 1 ratio of 8.8% at end 2012 (which improved to 9.2% in January 2013 following a securitisation transaction), which is considerably lower than those of its UK peers. In addition, Co-operative Bank reported a fully-loaded Basel III CET1 ratio of 6.3% (which improved to 6.7% in January). This is already below the new target capital ratio of 7% outlined by the Financial Policy Committee (FPC) before any further adjustments to its capital requirements and or resources that may come as a result of the PRA review, which is responsible for ensuring that UK banks have capital plans that will enable them to meet the 7% target. The prudence of asset valuations and the adequacy of provisions are two areas of focus under the PRA's review.

The bank's particularly low CET1 ratio is driven by substantial capital deductions for anticipated losses in excess of the currently low level of provisions on the non-core portfolio, which accounts for approximately six times its Tier 1 capital, highlighting its weak loss-absorption capacity. --- CRE EXPOSURES PROMPT INCREASE IN PROBLEM LOANS According to Moody's calculations, the bank's problem loan ratio increased to 10.9% at year end 2012 from 8.1% in 2011. Although the non-performing loan ratio of the bank's core portfolio remains stable, the quality of its non-core book has significantly weakened due to the deterioration of its CRE exposures. The considerable increase in impairments indicates that the initial fair-value protection created following the merger with Britannia Building Society significantly underestimated the losses this portfolio would experience. In addition, the limited efforts to effect asset disposals, compared with UK peers' aggressive deleveraging of non-core assets, may have resulted in the bank overestimating asset values and underestimating potential expected losses.

--- 2013 PROFITABILITY WILL REMAIN SUBDUED; BALANCE-SHEET DELEVERAGING COULD IMPROVE CAPITAL RATIOS Moody's considers that the bank's profitability will remain subdued during 2013 due to low interest margins, further losses in its non-core portfolio and a high cost base, as reflected in its reported cost to income ratio of 74% at year end 2012, which is high for a retail/SME-focused bank in the UK. Co-operative Bank posted a loss before taxes of GBP673.7 million in 2012 compared with a profit before tax of GBP54.2 million in 2011. The loss was mainly driven by a significant increase in impairment losses to GBP468.7 million (GBP114.9 million in 2011), close to four times the impairment losses recorded in 2011. Moody's believes that Co-operative Bank is unlikely to be able to generate a significant amount of capital through earnings.

As such, to maintain capital ratios at the level required to satisfy its ongoing regulatory objectives, Moody's would expect to see the bank deleveraging its balance sheet and receiving additional support from its parent (Co-operative Banking Group Ltd (unrated)) following their announcement to dispose some assets, such as its life and general insurance businesses. Moody's believes that there is material uncertainty as to whether these actions alone will be sufficient to maintain the capital base at the required level given the losses the bank may experience in its non-core portfolio. --- DECISION TO CANCEL VERDE ASSETS ACQUISITION IMPLIES THAT ANY FUTURE GROWTH WILL NEED TO BE ORGANIC Co-operative Group also announced on 24 April 2013 that it would no longer proceed with the acquisition of the assets and liabilities (known as "Verde") that Lloyds Banking Group has been required to sell by the European Commission. While the abandonment of the deal is not a material driver of today's action, had it proceeded to completion the deal would have strengthened Co-operative Bank's franchise and increased its customer base. However, Moody's believed that the deal would have also posed a number of challenges in terms of capital, liquidity and execution risk.

Its abandonment implies that future growth targets will be met through organic growth, which Moody's considers as challenging given the bank's current capital position. WHAT COULD MOVE THE RATINGS DOWN/UP Negative pressure on Co-operative Bank's ratings would stem from further deterioration in its Core Tier 1 capital driven by further loses or insufficient remediation actions to maintain and increase capital ratios above minimum regulatory requirements. In addition, a further decline in profitability and efficiency ratios would exert negative pressure on the ratings. Since the debt and deposit ratings benefit from systemic support uplift, they remain sensitive to any further changes in Moody's support assumptions or the credit quality of the UK government (Aa1 stable). There is no short-term upward pressure on the ratings, reflected by the review for downgrade. However, in the long term, upward pressure might develop on the ratings following (1) significant improvements in the bank's capital position; (2) further reductions in its non-core portfolio; and (3) improvements in its profitability and efficiency ratios. The principal methodology used in this rating was Moody's Consolidated Global Bank Rating Methodology published in June 2012. Please see the Credit Policy page on for a copy of this methodology.

REGULATORY DISCLOSURES For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity.

Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity. Please see for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating. Please see the ratings tab on the issuer/entity page on for additional regulatory disclosures for each credit rating. Carlos Alberto Suarez Duarte JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Moody's downgrades Co-operative Bank; on review for further downgrade No Related Data. © 2017 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved. CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC.

AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT.

MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable.

Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications. To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes.

Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.” Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001.

By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be reckless and inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser. Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK.

MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively. MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000. MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

Question: The Co-operative acquired which building society in 2009 ?
Answer: THE BRITANNIA