The bank agreed a deal yesterday to fill its £1.5bn capital black hole using hedge funds and other institutional bondholders and floating the bank on the stock market. However, this sparked fears the lender could pull back from the mortgage market.
Boulger, senior technical manager at John Charcol, told Mortgage Solutions the Co-op and its intermediary brand Platform had started the year strongly but lending had tailed off over the summer.
“Platform started year quite actively but it is noticeable in last few months there has been a slowdown,” he said. “They must have downgraded the lending targets they had at the start of the year.”
Boulger said he expected the lender to remain uncompetitive until next year due to the changes.
“Platform is likely to remain reasonably uncompetitive in the short-term. It will remain in the market but with a product range that not many people will take up.
“It’s realistic to think Platform will come back to the market by next year, but probably not in the first quarter.”
The rescue plan will see the Co-op Bank floated on the stock exchange with the Co-op Group retaining a 30% share in the business.
A spokesperson for the Co-operative Bank was unable to comment on future lending and said all focus was currently on its recapitalisation plan: “The bank is continuing to operate. This is about recapitalisation of the business and the bank’s modus operandi has not changed.”
Boulger added: “The recapitalisation solution satisfies bondholders and the Co-op remains the biggest shareholder. The jury’s out on what this will mean but you can’t afford to change ethos of the bank or they will lose a lot of customers.
“Once they are properly capitalised they will be in a position to start lending again.”
