Co-op opts out of vote on bonuses for bosses

THE Co-op Bank has scrapped a shareholder vote on bonuses for bosses as it prepares to fail the Bank of England’s stress tests.

The troubled lender told investors that it ‘did not believe it is appropriate at this time’ to ask shareholders to approve LongTerm Incentive Plans (LTIPs) .

It added that the awards ‘may no longer be appropriate’ and that it is highly unlikely that it will be able to establish how much should be paid ‘in the time frame required’.

A vote had been due to take place with shareholders next Wednesday. Co-op said its remuneration committee will look at appropriate alternatives to replace the LTIPs.

The highly unusual move comes as the Co- op is braced to fail stress tests conducted by the Bank of England’s Prudential Regulation Authority.

The results – which determine whether the authority believes banks have enough capital to withstand another financial crisis – will be announced on December 16 for all eight lenders which took part.

The Co-op said it is considering whether to change, or speed up, its strategy of disposing of toxic assets in order to boost its capital position.

It added: ‘The board has therefore determined to cancel the meeting on December 10, with the result that it is highly unlikely that the processes required to establish as 2014 LTIP will be completed in the time.’ Insiders refused to give a more detailed explanation for the decision.

Chief executive Niall Booker, pictured, has been in line for up to £2.9m this year – but this was dependent on the Co- op not breaching capital rules and its financial position improving.

The Co-op told investors that ‘given positive developments in market pricing’ it may now be able to sell some of its toxic assets more quickly and at a better price, improving its resilience to a severe economic downturn.

It was encouraged by the recent £157.5m sale of Illius Properties, which purchased repossessed homes and fetched a better price than expected. It now wants to wind down its troublesome £7bn Optimum loan book.

The Co-op was saved from collapse when a rescue deal was struck in December last year to plug a £1.5bn capital shortfall.