Co-op posts £132m loss after banking write-off

Co-operative Group has fallen into the red for the first time since 2013 after writing off the entire value of its stake in the troubled Co-operative Bank.

The mutual slumped to a pre-tax loss of £132 million for 2016 after the value of its 20% holding in the Co-operative Bank was slashed from £185m in 2015 to zero.

The Co-operative Bank was put up for sale in February amid concerns over its balance sheet strength.

Losses at the Co-op Group come against profits of £23m in 2015 and mark the first time it has fallen back into the red since 2013, when it was plunged into crisis as the bank’s woes emerged.

It said the move to write off its stake in the Co-op Bank was “prudent”, but it hoped to get “some value from the sale”.

The group had already marked down the value of the shareholding to £140m at its half-year results.

CEO Steve Murrells said the group backed the Co-op Bank sale plans, but was keen to ensure any buyer took on the values and ethics of the mutual.

He said: “We’re absolutely behind the decision and hopeful that a good bidder will come forward.”

Group chairman Allan Leighton said 2016 was a “momentous” year for the group as it finished its second year of a major turnaround plan.

Membership numbers rose to four million and it has signed up another 350,000 so far in 2017.

Annual results showed the convenience store arm notched up a 3.5% rise in like-for-like sales, although underlying operating profits slipped 2% to £182m as it invested in the offering.

Underlying earnings were flat at its funeralcare business, at £69m, while it narrowed losses in its insurance arm to £18m from £60m in 2015 thanks to a record 28% surge in sales.

However, the group gave a cautious outlook, warning of “fierce” competition and a squeeze on consumer budgets.

Co-op has written off the value of its bank stake from £185m to zero.