Co-op Bank making progress as losses fall

THE Co-operative Bank has slashed annual losses from £632.8m to £264.2m and agreed a new contract with its chief executive, Niall Booker.

The bruised and battered Manchester lender said it was still at an “early stage of its turnaround plan” after a £1.5bn black hole was found in its balance sheet in 2013, but said progress was being made as operating losses were slashed from £662m in 2013 to £55.3m in the 12 months to Decmber 31.

Total charges, including PPI claims were down from £411.5m in 2013 to £101.2m in 2014.

Customer deposits fell from £33bn to £29.8bn last year with retail and corporate accounts falling. The bank said it had closed 72 branches last year and would close 57 this year.

Niall Booker, who has agreed a deal to stay with the bank until the end of 2016, said: “Over the course of 2014 the management team has continued to take significant steps to implement the strategy and to turn the bank around.

“The Co-operative Bank is stronger than a year ago and we end the year with a strengthened capital position, ahead of schedule in the reduction of non-core assets and having made progress reducing underlying costs and improving the day-to-day management and governance.

“However, we are in the early stages of the turnaround and there is still much to do to transform the organisation into a sustainable business. There are a number of matters where the Bank does not yet meet FCA and PRA regulatory requirements and expectations. The revised plan, accepted by the regulators, seeks to address this.

“Improving the resilience of the bank remains key to delivering our revised plan. This will be primarily achieved through the further reduction of our risk weighted assets and by improving the resilience of our IT infrastructure.”

Booker said the performance of the core bank had begun to stabilise, and the plan is to build on this in 2015 by investing in the brand.

The bank said in a seperate statement that Booker, a former HSBC banker who joined the bank during its 2013 crisis, has been given a new pay package “that places a much greater emphasis on variable compensation tied to a full range of key performance metrics as the bank progresses its turnaround”.

The Co-op Bank said Booker has been given no bonus for 2014 but could receive one this year, worth up to £1.25 million. His salary has been increased from £1.2m to £1.3m, while his “role based allowance” will fall from £1.68m to £400,000.

Booker’s total pay package came in at £3.8m for 2014, the annula report reveals.

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