Partly Cloudy

Partly Cloudy

max temp: 16°C

min temp: 11°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.

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.

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

A Martlesham man is angry after a booked trip on a steam train up Snowdon was cancelled due to an obese family taking up all the room in his carriage.

A 170-tonne electricity transformer the size of a bungalow is being transported along the A12 in Suffolk on Saturday.

Chinese backers yesterday signed important financial agreements connected to the construction of Suffolk’s yet-to-be-approved Sizewell C nuclear power station.

A 15-year-old girl missing from Ipswich has been found, according to Suffolk police officers.

A 32-year-old autistic woman from Ipswich has hosted a Macmillan coffee morning in memory of her mother, who died of cancer two years ago.

And depending how significant the prize, or the emotional attachment to it, their fates can range from living out their days in a dusty draw to taking pride of place on your (or your parent’s) mantelpiece.

Police are appealing for witnesses and information after a nine-year-old girl reported being approached by two men on bicycles in Ipswich.

Police stopped a driver on the A14 this afternoon near Needham Market who was going at 107mph.

Members of a Suffolk-based fitness team have raised more than £7,000 for Ipswich Hospital’s neonatal and paediatric wards after completing the Three Peaks Challenge in just 22 hours.

Opened up in 1938, Broomhill Pool was, for decades, one of the most popular attractions in Ipswich.

Most read

Most commented

HOT JOBS

Show Job Lists

Topic pages

Streetlife

Newsletter Sign Up

MyDate24 MyPhotos24