Co-op Bank battles on as H1 losses grow
THE Co-operative Bank has seen its first half losses almost treble, as it admits that fixing legacy issues will “impact the financial performance of the business for some time”.
The Manchester-based bank has reported a pre-tax loss of £204.2m to the end of June 2015 – that’s £127.2m higher than the first half of 2014.
It said that the main reasons for the increased loss were losses on asset sales, a reduction in overall income, increased legal risk charges and increased cost associated with turning the business around.
In 2013, a £1.5bn black hole was found in its balance sheet and the bank is now 18 months into a five year turnaround plan.
During the first half of the year the bank completed the first significant tranche of its disposal of Optimum, a non-core residential mortgage portfolio, raising £250m of Tier 2 capital.
Chief executive Niall Booker, a former HSBC banker who joined the bank during its 2013 crisis, said this sale, combined with actions taken to improve margins and address the underlying costs of the business, have strengthened the bank.
He added: “We have come a very long way since June 2013 when our focus was to make sure the Bank avoided resolution and the need for financial support at the expense of the taxpayer.
“Since then we have raised an additional £1.9bn of Core Tier 1 and £250m of Tier 2 capital, renewed and strengthened our Board, improved our processes and overhauled our governance. There remains much work ahead but the actions we are taking are creating a resilient bank that can standalone, distinguished in the marketplace by its values and ethics.”
Booker added that the deleverage of non-core assets would remains a focus to improve the bank’s capital resilience under stress and deliver the turnaround plan.
