Co-op Bank ‘out to dodge Carney crackdown’

TOP executives at the loss-making Manchester-based Co-operative Bank are in line for a big rise in basic pay as it bids to swerve a crackdown on bonuses.

The bank wants to increase salaries to stem a brain drain from its senior positions.

The move is likely to bring the Co-op into conflict with Bank of England governor Mark Carney, who has prevented the bank from paying bonuses until it improved its financial performance.

Some 71 senior manages at the Co-op earned £25m – more than £350,000 each – last year.

In the Co-op’s interim financial report for 2016, chief executive Niall Booker said: “Given our current inability to make variable payments to our colleagues, I am pleased that we have agreed and announced a fixed payment structure for the bulk of our colleagues.

“We are still considering a number of options for our more senior people. We hope to resolve this by the end of the third quarter so that we remain competitive and are able to attract and retain talented colleagues.”

However, the report also said the bank does not have enough capital buffers to hold out in the event of a “severe” financial crisis.

The Sunday Times says the commitee which oversees renumeration at the Co-op is looking at different ways it coulds finance executives’s salary increases, including asking for more cash from its American owners or new investors to pay for so-called role-based allowances.

The allowances – which are guaranteed regardless of performance – have already been introduced by some UK banks to avoid bonus bans imposed by the EU, and have been the source of controversy.

The Co-op was plunged into crisis in 2013 when its proposed takeover of 600 Lloyds Bank branches collapsed, its chairman Paul Flowers was publicly disgraced buying drugs and the year ended with losses of £2.5bn, and it hanging on for survival.



The legacy issues faced by the bank resulted in pre-tax losses of more than £600m last year.

It still expects to report pre-tax losses this year and next, although it forecasts a return to operating profitability for the core bank before the end of 2017.



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