Co-operative Bank to axe 400 jobs in bid to cut costs
The Co-operative Bank has unveiled plans to cut 400 jobs as part of the lender’s largest cost-cutting and restructuring programme since it was bailed out by hedge funds in 2017.
The job cuts aim to reduce the size of its 3,000-strong workforce by about 12% Redundancies will affect staff across the business, including at its 50 branches.
A spokesperson said the decision was unrelated to ongoing takeover talks with Coventry Building Society, which is considering buying the Co-operative Bank from its hedge fund owners and has been locked in talks over a potential deal since November.
It comes just weeks after the Cooperative Bank reported that annual profits had nearly halved to £71.4m for 2023, due primarily to one-off costs. That includes £29m to cover the costs of a redress scheme meant to compensate mortgage customers affected by changes to its standard variable mortgage rate back in 2011 and 2012.
The Co-operative Bank said the cuts were part of “next phase of its transformation plan”, having spent the past three years trying to “simplify and transform” the lender and create a business that would deliver sustainable growth. That included spending £100m on a new IT system.
“Today, we have announced a series of changes across the bank which are essential for the delivery of the next phase of the strategic plan,” the lender said in a statement.
“These include the commencement of a consultation on a proposed operating model restructure which is expected to result in a net reduction of approximately 400 roles (12%) across the bank,” the statement added.
“The decision has not been made lightly, and the bank will continue to work closely with our trade union and to support impacted colleagues.”
Staff, who were notified of the job cuts on Tuesday morning, will enter into a consultation period running until 7 May. The timing means staff will be gone by the end of August.
The bank is continuing exclusive talks with Coventry. While the exclusivity period does not technically have a deadline, an extension beyond the end of March will require an informal agreement from both lenders.
A potential deal would return the ethical bank to member ownership and create a high street challenger with almost 5 million customers.
The bank traces its origins to the 1872 establishment of the Co-operative Wholesale Society, the body that would become the Co-operative Group, and was meant to provide financial services to the wider co-operative movement in Britain, in which member-owned businesses worked for the common good.
However, it ran into trouble in 2013 when a £1.5bn hole was discovered in its accounts after its disastrous takeover of the Britannia building society in 2009. The problem resulted in the bank separating from the Co-operative Group and being rescued by the consortium of hedge funds, which took full control in 2017.
Its reputation also suffered after the former chair, the ex-Labour councillor and Methodist church minister Paul Flowers – nicknamed the “Crystal Methodist” – pleaded guilty to possession of cocaine, crystal meth and ketamine in 2014.
The bank returned to profit for the first time in a decade in 2022 and was able to triple its bonus pot for bankers, just in time for its 150th anniversary, before one-off costs depressed bottomline earnings for 2023.