Banking: Co-operative Bank reports reduced first-half loss of £75.8m
08:42 22 August 2014
The troubled Co-operative Bank today reported a £75.8million pre-tax loss for the first half of 2014 but said it was encouraged by its progress since it was rescued from near-collapse last year.
The bank’s interim results are the first since it reported a full-year loss of £1.3billion for 2013 but, while it remains in the red, the six-month loss is an improvement on the loss of £844.6m reported for the same period last year.
It said the number of permanent employees of the bank had been slashed by 13% in the first half of 2014 while its capital position had been strengthened following a £400m capital-raising.
The business had to be rescued last year after a £1.5bn hole was discovered in its balance sheet, in a deal which saw the wider Co-operative Group cede majority ownership of it to bondholders including US hedge funds.
Chief executive Niall Booker said: “Considering the scale of the challenge we faced a year ago, we are encouraged by the progress made to ensure the stability of the bank.”
During the first half, the bank said it saw an increase in the number of customers leaving. There was a net loss of 28,199 current accounts but this was less than 2% of the total, it said.
Chairman Richard Pym said this followed “negative publicity and significant competitor activity”.
The bank has embarked on a cost-cutting programme and closed 46 branches in the first half of the year, and said today that more branches would be closed in the second half.
Mr Booker said the bank was “stronger than it was a year ago” and ahead of schedule in the disposal of unwanted assets, while the way the company was run at board level had improved, this following a scathing report into its near-collapse.
“However, the issues we continue to face in building a sustainable business are deep rooted and there remains much to be done,” he added.
“Transforming the organisation into a viable and profitable business which generates capital in the long term still requires significant change - both operationally and culturally.”
Mr Booker reiterated that the bank did not expect to achieve a full-year profit until 2016.
A report earlier this year by former Treasury mandarin Sir Christopher Kelly into the bank’s near-collapse pinned the blame on toxic loans inherited from its disastrous merger with the Britannia Building Society.
It laid bare a “sorry story” of multiple management failures and painted a picture of the bank’s culture in which an “acceptance of mediocrity” took hold.
The business has been at the heart of the wider Co-op Group’s difficulties as it faced the worst crisis in its history, during a period which also saw a drugs scandal involving the bank’s former chairman, Paul Flowers.
It was largely responsible for dragging the group to a record full-year loss of £2.5bn, while its 100% control of the lender shrank to 20%.
In June, the bank launched a poll of nearly five million customers as it updated its ethical policy, insisting that despite slipping from the control of the Co-operative Group, ethics remained central to its identity. Today it said more than 73,000 had responded to the poll, with the results due in the autumn.