max temp: 16°C

min temp: 8°C

ESTD 1874 Search

Banking: Co-op Bank to raise further £400m as recovery suffers a setback

09:35 24 March 2014

The Co-operative Bank has revealed a setback to its recovery after admitting it needs to raise another £400million to cover past issues.

The Co-operative Bank has revealed a setback to its recovery after admitting it needs to raise another £400million to cover past issues.

PA Wire/Press Association Images

The Co-op Group’s banking arm revealed a setback to its recovery today after admitting that it needs to raise another £400million to cover past issues.


The business, which is set to report full-year losses of up to £1.3billion for 2013, said the matters relate to conduct and legal documentation, such as legacy PPI business and technical breaches of the Consumer Credit Act.

The Co-op Bank is now under the control of bondholders as part of last year’s refinancing to fill a £1.5bn hole in its balance sheet.

Today’s update means the starting capital position of the bank for its four- to five-year recovery is weaker than in the rescue plan announced last year, requiring shareholders to inject another £400m into the business.

Chief executive Niall Booker said: “The proposed capital raise would enable us to reset this starting point and continue with the execution of our original business plan.”

The bank said continuing “root and branch” reviews of processes, procedures and documentation had produced further conduct and legal issues.

In addition, one-off costs associated with the separation of the bank from the Co-operative Group have proved more costly, time-consuming and more complex than anticipated.

Its capital ratio, a key measure of its financial strength, is now expected to be around 7.2%, compared with previous guidance of near 9% and against the regulatory minimum requirement of 7%. The bank’s results for 2013 are expected to be announced on or before April 8.

The bank said it was focused on improving its capital position and on community banking through retail and small business (SME) customers.

Mr Booker added: “The new executive team brought in just nine months ago is continuing to review aspects of the Co-operative Bank’s legacy operations, assets and liabilities.

“As a result of this continuing review, we are unearthing a range of issues which the new executive team is having to address.”

The risks were identified at the time of the rescue process last year but the Co-op said it was now quantifying the financial impact of some of those risks.

Mr Booker said there were some early indications of progress in its turnaround plan. He added: “We have started to simplify the business, reduce costs and de-risk assets as we drive the change needed to return to our roots as a bank focused on our retail and SME customers. However, there remain significant challenges ahead.”

Staff numbers have been reduced by 1,000 in the last year, equivalent to 14% of its workforce, as part of a planned 15% cut in its branch estate.


1 comment

  • The whole co-op set up is a mess ,with shops closing ,milk rounds gone, chemists being sold , banks losing a fortune , big pay outs to the Labour Party .,it's about time the lots was got rid of to some organisation who could ran it properly .

    Report this comment


    Monday, March 24, 2014

A queue outside of a Greggs store.

Baker Greggs warned the new national living wage will put pressure on the group to raise the prices of its pasties and sausage rolls.

Home Secretary Theresa May arrives to deliver her speech at Manchester Central during the Conservative Party conference.

Theresa May faced an angry backlash from business leaders and refugee charities for falsely “vilifying” immigrants in a bid to boost her own political career.

Amanda Bond, Visit Suffolk brand manager

The value of Suffolk’s tourism industry has grown to £1.85billion a year, according to new figures, with the total, for the 2013 season, represents a rise of £50million over 2012.

Pigs Gone Wild campaign project leader  Norman Lloyd with the organisation's own pig sculpture.

Businesses are being urged to get behind a public art initiative which aims to raise £100,000 for the St Elizabeth Hospice in Ipswich.

The presentation of the Gold award in the Community Relations Campaign category to Essex County Council at the CIPR Anglia Thames & Chiltern Pride Awards 2015

Photo:  Steve Pope - FOTOWALES

Public relations professionals across East Anglia have received recognition in the regional round of the 2015 PRide Awards.

Dr Aled Jones, Anglia Ruskin University.

The director of Anglia Ruskin University’s Global Sustainability Institute (GSI) is in the running to be named the greenest academic in the UK.

New report on prosperity in seaside towns

New research has highlighted the importance of entrepreneurs in helping to revive seaside towns that have fallen into decline and unlock further potential in those already prospering.

Dan Poulter with employees at B&Q

A Suffolk MP has said he will do what he can to try and prevent a B&Q store closing down with the potential loss of around 100 jobs.

Helen Drage,  co-founder of Drage & Tozer Opticians.

Sudbury opticians firm Drage and Tozer, founded in 1995 by Helen Drage and Sandra Tozer, has celebrated 20 years in business by expanding into new premises.

Val Carrol, director of healthcare at Beckett Financial Services, receives the company’s Commendation at the Investment Life & Pensions Moneyfacts awards from comedian Tim Vine.

Bury St Edmunds-based Beckett Financial Services has been recognised by a national financial services publication for delivering outstanding levels of customer satisfaction to its healthcare clients.

Most read

Most commented

Topic pages