Co-op profits almost halve as last shares in bank sold

● Mutual pulls plug on 145 years of banking history ● Food flourishes but insurance sinks into the red

The Co-operative Group revealed yesterday that it has formally drawn a line under 145 years of history by selling its final 1 per cent stake in the troubled Co-op Bank.

The food-to-funerals chain said it had sold the holding for about £5 million in the past few days, as it also posted a near-halving of underlying interim pre-tax profits to £14m for the six months to 1 July.

That compared with a profit of £27m in the same period last year. Co-operative chief executive Steve Murrells said the sale of the mutually-owned group’s residual stake in the Co-op Bank made sense.

“At 1 per cent, we would have had no influence in that business, and in selling to an existing shareholder, it now gives us the opportunity to focus on our core business. That felt the right and logical thing to do,” he said.

The Co-op Bank was formed in 1872 as the Loan and Deposit Department of the Co-operative Wholesale Society, becoming the CWS Bank four years later.

However, the financial arm nearly collapsed in 2013 after a £1.5 billion “hole” was found in its balance sheet, and the Cooperative Group sold off most of its majority shareholding as the bank was bailed out by US hedge funds.

The mutual had been left with just 1 per cent after a £700m rescue and refinancing deal to get the bank on track again was completed some weeks ago.

Asked how long the bank would retain the Co-op name, Murrells said: “That’s a questionyoushouldputtothebank itself.”

It came as the Co-op said its insurance arm slid £1m into the red in the first six months of 2017 as it increased reinsurance through third parties, compared with a profit of £11m a year earlier.

However, the group posted its 14th consecutive quarter of rising sales in its supermarkets, with like-for-like growth of 3.5 per cent. Its convenience stores saw same-floorspace sales rise 4.5 per cent. The Cooperative has about 6 per cent of the UK food retail market.

Underlying profits for the food business rose 3 per cent to £65m. Murrells said the group had “continued to perform in the face of challenging markets”.

He also confirmed that the group’s ongoing exclusive talks with wholesale retail chain Nisa “could potentially lead to an offer being put to the members”.

The chief executive added that a potential deal would “play to its core strengths”, as Nisa’s “roots are firmly in wholesale”. An Indian restaurant and takeaway in Hamilton that has been visited by celebrity chef Tom Kerridge while learning how to make the perfect curry has been growing its workforce due to demand. Mushtaqs now has a team of nearly 70 after starting out with six staff in 2009 and has been praised for its work to support young people. Pictured is owner and chef Ajmal Mushtaq at the family-run restaurant, which only offers ten choices of dish to maintain quality control.