Co-op Bank reins in losses as a fifth of staff axed

THE Co-op Bank has cut half-year pre-tax losses to £75.8m but also drastically reduced the scale of its business.

Year-on-year, staff numbers have fallen by 21% to 5,860.

And since Christmas it has closed 46 branches, 16% of the total. A further 25 will go in the fourth quarter.

Chief executive Niall Booker said it was now “much stronger” than last year when it nearly collapsed, but still required “significant change” to become a viable business.

Last year the bank agreed a rescue deal to plug a £1.5bn hole in its finances which led to US-based hedge funds owning a large number of shares. External investors now hold around 75% of the shares with the Co-op Group owning the rest.

The upheavals of the past year have prompted some customers to leave. The bank said it had a net loss of 28,199 current accounts in the first half, although this represents 2% of all accounts and it said this trend had slowed in recent months.

In the six months to the end of June pre-tax losses fell from £844.6m on revenues of £308.5m, down from £347.4m. The bank said it had not identified any new areas of mis-selling and total charges, including payment protection insurance compensation, were down from £163m to £38.6m in the first half.

It is now focusing on reshaping the bank around our retail and SME customers and through increased mortgage lending.

Mr 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. By the measures of capital and liquidity the bank is considerably stronger than it was a year ago. We are ahead of schedule in the disposal of non-core assets and have improved governance, particularly at board level. However, the issues we continue to face in building a sustainable business are deep rooted and there remains much to be done.

“Transforming the organisation into a viable and profitable business which generates capital in the long term still requires significant change – both operationally and culturally.”

He added: “The core bank continues to remain stable. In the first half of the year more people switched into the bank than in the second half of 2013. Although we have also seen an increase in the number of people switching out of the bank, the net numbers remain small relative to our total number of current account customers whose continuing loyalty is deeply appreciated. Recent trends suggest this net outflow of retail customers has slowed.”