Co-op Bank improving but warns of continued losses

Scandal-hit Co-operative Bank saw losses nearly treble in the first six months of the year and warned its recovery will take at least another two years.

Half-year losses widened dramatically to £204.2 million from £77m a year earlier as the bank counted the cost of moves to put it on the road to recovery, and confirmed it would not return to profit until at least 2017.

The Co-op has been battling to recover since being thrown into turmoil in 2013 after a £1.5 billion black hole was discovered in its balance sheet.

It has been selling off risky assets and cutting branches to get its balance sheet back in shape, revealing transactions at its branches were down 28% year-onyear in the first half after slashing its network from 227 a year ago to 165.

Staff numbers have also been reduced by 191 to 5,850, although the bank said it had attempted to transfer staff where it had outsourced services.

Its half-year figures come after a damning official report last week found the Co-operative Bank misled investors and kept regulators in the dark as it came close to collapse in 2013.

The Prudential Regulation Authority and Financial Conduct Authority found serious failings in the way the lender was run from July 2009 to December 2013, but spared the bank a £120m fine because of the state of its balance sheet.

Despite the widened losses, Co-op Bank chief executive Niall Booker insisted the bank’s turnaround was on course, with the lender now in better shape to withstand stresses in the wider economy.

“Although the core bank remains work in progress, its performance is also beginning to improve,” Mr Booker said.

“Of course, we have always said that addressing legacy issues will continue to dominate financial performance for some time and there is considerable work ahead towards a full recovery.”