Last checked at 
By Huw Jones
LONDON, June 12 (Reuters) - Britain's Co-operative Group needs to be made more resilient after the bank'ssurprise recent credit rating downgrade, a senior Bank ofEngland official said on Wednesday.
Andrew Haldane, BoE director of financial stability saidCo-op's situation was "plainly difficult."
He said a multi-notch downgrade to its credit rating to junkstatus by Moody's had come as a surprise to almost everyone butso far there had not been the sharp outflow of liquidity thatsome might have feared.
"But further needs to be done to put Co-op in a situation ofresilience and sustainability," Haldane told parliament'sTreasury Committee, without elaborating.
Last week the Co-op Group appointed a new finance chief andchairman for its banking division as it tries to persuade UKregulators it can plug a capital gap without state help.
Haldane was being quizzed by lawmakers on his reappointmentto the BoE's Financial Policy Committee (FPC) whose task is tospot wider risks in the financial system.
The FPC is requiring UK banks to collectively plug a 25billion pound ($38.99 billion) capital hole by the end of thisyear, with much of this accounted for by the Co-op bank, andpart-state owned Royal Bank of Scotland and Lloyds.
Donald Kohn, who has been reappointed as an external memberof the FPC, told the treasury committee that the FPC was late intelling banks exactly how much more capital they should hold.
Analysts say the capital shortfall at the Co-op could be asmuch as 1.8 billion pounds.
The Co-op is selling its life insurance business to RoyalLondon for 220 million pounds and has put itsgeneral insurance business up for sale.
The Co-op is considering more drastic action such as cuttingfuture payments to bondholders to help build up its capitalbuffer.
It has also stopped taking on new small business customers.
The clock is ticking as Britain's banking regulator wants toapprove plans from the Co-op and other banks on capital raisingby the end of this month.
