Financial News

  • 14 April 2014, 18:06

Co-op Bank In Record £1.3bn Annual Loss

The struggling Co-operative Bank has reported a pre-tax annual loss of £1.3bn and said it would not return to profit for at least two years.

The bank also confirmed it would not make £4.97m deferred annual bonuses to its former bosses.

Chief executive Niall Booker said an overhaul plan known as the liability management exercise (LME) had "kept the bank alive".

Taking into account a profit made by the LME, it said the loss was reduced to £586m for the year ending December 31.

Mr Booker said: "The results today reflect the magnitude of the issues that have come to light since I jointed the Co-operative Bank ten months ago.

"It is early days but initial progress on our business plan is encouraging and we remain enthusiastic about the long-term potential for the bank."

The embattled parent mutual, the Co-operative Group, lost overall control of its banking arm to US hedge funds in December as part of its rescue plan. It now holds a 30% stake.

The £1.5bn funding 'black hole' was added to in March when it revealed a further £400m gap, forcing it to seek further investor funds.

The institution, which continues to market itself as having "ethical principles", said it cut assets last year by £2.1bn and reduced staff levels by 14% - around 1,000 employees.

It said it would try to restore its capital position, and refocus attention on being a bank for householders and small to medium-sized businesses.

Part of the plan includes reducing its product range, along with improving digital and branch-based banking services.

Although former executives would miss out on deferred bonuses, Mr Booker is to receive a £1.2m salary and benefits package and £1.7m bonus - dependant on the bank's future performance.

A further £1.2m is part of a long-term incentive plan that is payable over three years.

The bank's annual results were published on Friday after two earlier delays to the release.

The parent Co-op Group, which is expected to report an even larger loss later this month, also continues to struggle to find its way in an increasingly competitive environment.

 Earlier this week the former City minister, Lord Myners, quit the board amid opposition to his planned reforms of the business.

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