Co-op Reports £559m Loss Due To Bank Troubles
The Co-operative group has announced a half-year pre-tax loss of £559m amid a writedown of £496m on loans at its troubled banking arm.
The Co-operative Bank alone made a pre-tax loss of £709.4m in the six months to June and the group said there will be "no quick fixes" as it embarks on a four-year turnaround plan.
It admitted it does not expect its banking arm to make a profit for years and warned a restructuring of the business makes job losses "inevitable".
Part of the loss has been blamed on the installation of a new computer system by the group's former management team.
However, as part of an ambitious growth strategy, it was designed for a much bigger institution and those currently in charge say it does not suit the company's needs as a smaller operation.
Group chief executive Euan Sutherland said: "This has been a very difficult first half for The Co-operative Group and the results highlight both the well-documented challenges faced by The Co-operative Bank and the significant work to do at Group level.
"Importantly, today's announcement also underlines the need for the £1.5bn Capital Action Plan we announced in June to stabilise the Bank, which we reaffirm today and which remains on track."
He said the Co-op has "no plan B" for rescuing the bank and is confident bond holders will accept the current proposals.
He added: "We remain convinced of the considerable potential to be realised across the Group and are confident that we are well placed to restore the Co-operative brand to its rightful place at the heart of communities up and down Britain."
Mr Sutherland took his position in May and said he has since been focused on stabilising the bank.
Banking Group chief executive Niall Booker said the business continued to see the withdrawal of corporate deposits, while retail customers remained.
Other parts of the business reported profits, with the Co-op's food group making £117m in the same period.