Sunny

Sunny

max temp: 17°C

min temp: 10°C

Search

Banking: Co-op Bank to raise further £400m as recovery suffers a setback

09:35 24 March 2014

The Co-operative Bank has revealed a setback to its recovery after admitting it needs to raise another £400million to cover past issues.

The Co-operative Bank has revealed a setback to its recovery after admitting it needs to raise another £400million to cover past issues.

PA Wire/Press Association Images

The Co-op Group’s banking arm revealed a setback to its recovery today after admitting that it needs to raise another £400million to cover past issues.

shares

The business, which is set to report full-year losses of up to £1.3billion for 2013, said the matters relate to conduct and legal documentation, such as legacy PPI business and technical breaches of the Consumer Credit Act.

The Co-op Bank is now under the control of bondholders as part of last year’s refinancing to fill a £1.5bn hole in its balance sheet.

Today’s update means the starting capital position of the bank for its four- to five-year recovery is weaker than in the rescue plan announced last year, requiring shareholders to inject another £400m into the business.

Chief executive Niall Booker said: “The proposed capital raise would enable us to reset this starting point and continue with the execution of our original business plan.”

The bank said continuing “root and branch” reviews of processes, procedures and documentation had produced further conduct and legal issues.

In addition, one-off costs associated with the separation of the bank from the Co-operative Group have proved more costly, time-consuming and more complex than anticipated.

Its capital ratio, a key measure of its financial strength, is now expected to be around 7.2%, compared with previous guidance of near 9% and against the regulatory minimum requirement of 7%. The bank’s results for 2013 are expected to be announced on or before April 8.

The bank said it was focused on improving its capital position and on community banking through retail and small business (SME) customers.

Mr Booker added: “The new executive team brought in just nine months ago is continuing to review aspects of the Co-operative Bank’s legacy operations, assets and liabilities.

“As a result of this continuing review, we are unearthing a range of issues which the new executive team is having to address.”

The risks were identified at the time of the rescue process last year but the Co-op said it was now quantifying the financial impact of some of those risks.

Mr Booker said there were some early indications of progress in its turnaround plan. He added: “We have started to simplify the business, reduce costs and de-risk assets as we drive the change needed to return to our roots as a bank focused on our retail and SME customers. However, there remain significant challenges ahead.”

Staff numbers have been reduced by 1,000 in the last year, equivalent to 14% of its workforce, as part of a planned 15% cut in its branch estate.

shares

1 comment

  • The whole co-op set up is a mess ,with shops closing ,milk rounds gone, chemists being sold , banks losing a fortune , big pay outs to the Labour Party .,it's about time the lots was got rid of to some organisation who could ran it properly .

    Report this comment

    pandy

    Monday, March 24, 2014

Ipswich Town have brought in 12 new players this summer.

The summer transfer window has now closed, during which Ipswich Town manager Mick McCarthy brought in a total of 12 new signings on permanent or loan deals.

A man has died at The Port of Felixstowe.

Investigators say their inquiries into the death of a contract worker at the Port of Felixstowe could take some time to complete.

Police are investigating

Further instances of vehicle crime were felt in Kesgrave on Sunday night after a car window was smashed, prompting a social media appeal for those with information to come forward.

Art on the Prom at Felixstowe last year

More than 100 artists will be exhibiting this weekend as Felixstowe stages one of its most popular events of the year.

Bradley Wiggins, far left, riding through Woodbridge during the first stage of the 2012 Tour of Britain

Tour of Britain spectators will get to see champion rider Sir Bradley Wiggins racing through Suffolk again when it comes to county this month.

East of England Ambulance Trust attended the scene

Emergency services were called to St Helen’s Street in Ipswich this afternoon, after a man was hit by a bus.

ANPR checking during multi-agency police operation

More than 2,000 uninsured drivers were deprived of their vehicles in just over two years, according to Suffolk constabulary figures.

Photo caption: (L-R) Courtney Culf, Cllr TJ Haworth-Culf, Cabinet Member for Customers, Communities and Leisure, Cllr Geoff Holdcroft, Deputy Leader and Cabinet Member for Resources, Cllr Ray Herring, Leader of Suffolk Coastal District Council, Cllr Andy Smith, Cabinet Member for Economic Development and Coastal Management and Peter Lanceley, Operations Manager at Suffolk Coastal Norse.

Extra play equipment costing £150,000 has been unveiled to give youngsters a late summer boost.

Nikos Savvas and Alan Whittaker of West Suffolk College and One sixth form

Two of the biggest education providers in Suffolk are today joining forces to create an academy trust which is designed to raise standards in the county.

Barclays Bank on Princes Street in Ipswich was closed due to a fight on the premises.

Two more suspects have been arrested after a mass brawl which led to the closure of Barclays Bank in Ipswich town centre.

Most read

Most commented

Topic pages