Co-op Bank needs £400m to stay afloat

THE Co-operative Bank could go bust within months if it does not raise £400million, it was revealed yesterday.

The dire warning was contained in the bank’s financial results, which showed a £1.3billion loss last year. Directors warned that failure to find £400million to plug a hole in its accounts could affect its ability to continue as a ‘going concern’.

Auditor KPMG said there was ‘significant doubt’ over the bank’s future if it does not raise the cash. If it did collapse, investors’ money would be protected under the Financial Services Compensation Scheme.

In a measure of the bank’s desperation to revive its fortunes, it emerged yesterday that chief executive Niall Booker, recruited from HSBC last May, will be paid £4.6million over 18 months to rescue the bank. Mr Booker revealed that £5million in bonuses due to senior staff would not be paid.

Mr Booker said he was ‘confident’ of raising the extra money even if the Co-operative Group, which owns 30 per cent of the lender, does not stump up £1 0million, its share of the fund-raising plan. The bank’s losses, following the discovery last April of a £1.5billion black hole in its accounts, complete a nightmare year for the Co-op, which has been rocked by a sex and drugs scandal involving former chairman the Rev Paul Flowers.

He was filmed arranging to buy cocaine and faced allegations that he used his Co-op and Bradford Council email accounts to organise drug-fuelled orgies with rent boys. The bank said it is still trying to reclaim £31,000 from Flowers, who quit last June. The cash was the first of three instalments of a £95,000 fee agreed when he resigned.