Co-op Bank 'sorry' for £1.3bn loss and £400m black hole

THE Co-op Bank has apologised to investors and customers after confirming that it lost £1.3bn last year and is unlikely to return a profit until at least 2016.

It also said that it urgently needed to raise another £400m of rescue capital in order to meet regulatory requirements.

"We appreciate that customers and other stakeholders continue to feel angry about how past failings placed the future of the business so seriously at risk,” Niall Booker, the Co-op Bank chief executive, said. "I would like to apologise to them, to thank them for their continued loyalty and to thank colleagues for their commitment during such difficult times."

The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

The bank came close to collapse last year when a £1.5bn hole was discovered in its balance sheet during attempts to buy 632 branches from Lloyds. That deal fell through, and a subsequent restructuring led the Co-op Group to lose control of the bank to a group of American hedge funds.

As the sense of crisis deepened, the former chairman of the bank, Paul Flowers, was filmed allegedly buying illegal drugs.

Now the bank appears to be taking action. "In a bid to mollify furious members of the Co-op Group, which has seen its stake fall from 100 per cent to 30 per cent as a result of the restructuring, the bank said it would no longer be paying out planned bonuses of £4.97m owed to former executives who left when the bank faced collapse,” The Times reports.

However, details of Booker's salary are likely to provoke a reaction. "Booker, the Co-op Bank's chief executive, will receive £4.6m for his first 18 months on the job," says the paper. "For his six months on the job in 2013, Mr Booker was paid £1.7m.”

Booker also made it clear that he did not intend to remain with Co-op for the long term and would leave once the bank had been stabilised.

The BBC reports that up to 44 branches of the bank will be closed in order to save costs. Jobs will be lost, it says, but "the bank has yet to put a figure on the number of posts under threat”.