Co-op Bank posts £135m first half loss

Co-operative Bank has reported a first half loss of £135.2m in its first financial results since it agreed a £700m rescue package with its lenders.

The beleagured bank, which was first put up for sale at the start of the year before scrapping the sale process in June, agreed a deal to raise £250m of new equity from existing investors and £450m from bondholders swapping into equity.

The capital injection means the bank has avoided being wound down by the Bank of England but it will also leave retail bondholders with less than half of their original investment and reduce the Co-operative Group’s stake in the bank from 20% to 1%.

The bank said the restructuring deal is progressing to plan and is on track to complete in September.

Co-op Bank said its first half loss to the end of June – an improvement on the £177m loss it posted at the same time last year – had pushed its core capital ratio down to 9.8% from 11% at the end of 2016.

Following more closures during the period, the bank’s network comprises 95 branches.

Despite the uncertainty surrounding the bank’s future, current account numbers reduced by less than 2% (c.25,000) during the period to 1.4 million accounts.

Liam Coleman, chief executive, said: “Against this backdrop, business performance in the first half of 2017 has been resilient. Customer satisfaction for the service we provide has increased and we have continued to reduce our cost base.

“Customer relationships are hugely important to us and the vast majority of customers have remained very loyal as we have progressed the sale and capital raise process and I am extremely grateful for their ongoing support.

“Of course there is more hard work ahead, and like other banks, we recognise there are risks to the UK economy, but this is a great bank and we are positive about the future. We have a competitive product set; strong customer service and a distinct ethical position and brand and although it is early days we look ahead with a robust mortgage pipeline and a renewed current account offer. As we celebrate 25 years of our customer-led ethical policy, we believe we have an important role to play in creating a more competitive banking market.”