The Co-operative Bank lost 38,000 customers in the first six months of this year and cut more than 1500 jobs in the last year as it went through what chief executive Niall Booker called a “whirlwind of negative publicity”.
This followed last year’s bailout of the bank’s £1.5 billion black hole by US hedge funds and bondholders and the arrest of its former chairman, Paul Flowers, who pleaded guilty to possession of drugs.
The bank today revealed it lost £76 million in the first half, down from the £845 million it lost a year earlier.
Booker said that it was stronger and better governed than a year ago and ahead of target on getting rid of unwanted assets. But he admitted the bank would not make a profit this year or next and still faced major problems.
“It is important to recognise we still need to ensure our capital base can meet the challenges ahead in terms of potential pension deficits, asset disposals, forthcoming stress tests and the outcome of regulatory reviews,” he said.
Co-op Bank lost 39,000 customers in the first half and gained just under 10,000, giving it a net loss of 28,000, or 2% of its total current accounts. Booker said this was “not significant and less than we had expected”, but he added: “The loss of any customer is a mortal wound.”
He said the rate of customers switching away from Co-op had improved recently and added that the bank would launch its new ethical policy and relaunch its brand in the next three months.
Booker said that the bank remained in regular contact with the regulator, the Prudential Regulation Authority, which had “indicated it would be concerned if an IPO [initial public offering] were to distract focus from the primary goal of delivering the bank’s turnaround plan and the board from providing effective oversight of, and direction to, the business”.
“It is logistically unlikely that an IPO could be executed before the end of 2014,” Booker added.
He said the board was open to “any alternatives to an IPO” and was working with all stakeholders “including shareholders and the regulator to do the best thing for the bank”.
Reduced losses in the first half were partly down to a write-back of provisions that the bank had previously made on potential bad debts which gave it a credit of £87 million.
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It also saw a sharp fall in the costs of misconduct issues — like payment protection insurance mis-selling and breaches of the Consumer Credit Act — from £167 million to £38 million.
