£1.3bn loss for Co-op Bank
THE Co-op Bank has confirmed a £1.3bn pre-tax loss and said it will not pay £5m in bonuses to senior executives.
In its twice delayed figures for the year to December 31 the bank said the overall loss had been reduced to £586m after last year’s rescue deal with bondholders which left the Co-op Group with a 30% stake.
However, last month it said it needed to raise a further £400m after “unearthing” a range of liabilities connected to payment protection insurance, interest rate swaps and breaches of the Consumer Credit Act.
Today the Co-op said it would not pay £4.7m in bonus due to performance hurdles not being met and/or people leaving the bank. It said this “demonstrates the board’s willingness to act in the interests of our customers and the bank”. But chief executive Niall Booker will receive a £2.9m pay package, of which £1.7m will be based on future performance.
Retail deposit balances were down less than 1% at £27.9bn suggesting most account holders have not switched despite a year of turmoil at the bank. Last April after it pulled out of a bid to buy more than 600 branches from Lloyds Bank and shortly afterwards admitted there was a £1.5bn hole in its balance sheet. Since then it has shed around 1,000 jobs, 14% of the total.
Chief executive Niall Booker said: “The results today reflect the magnitude of the issues that have come to light since I joined The Co-operative Bank 10 months ago. In addition, as we outlined on March 24, further costs have materialised since the completion of the Liability Management Exercise (LME) in December 2013 as a result of a continuing review of The Co-operative Bank’s legacy operations, assets and liabilities by the new executive team.
“During 2013 the task for the new management was to keep the bank alive. The successful completion of the LME prevented the Bank from going into resolution, preserving the bank for our customers and protecting jobs without cost to the taxpayer.”
He added: “It is early days but initial progress on our business plan is encouraging and we remain enthusiastic about the long term potential for the bank. We have started to simplify the business; we are reducing costs and are currently ahead of schedule in de-risking our assets. We are also beginning to fix the fundamentals of the bank as we drive the change needed to return to our roots as a bank focused on our retail and SME customers.”
A date has still not been set for the bank’s stock market listing due to a number of factors including “ongoing regulatory investigations”.
