Business

Co-op Bank still has 'much to do' as it pares losses

co-op bank Image copyright PA

The Co-operative Bank says it is making a "significant improvement" after reducing its losses to £264.2m in 2014.

In order to cut costs it will shut another 57 branches in 2015, following the closure of 72 sites last year.

"There is still much to do to transform the organisation into a sustainable business," said the bank's chief executive, Niall Booker.

The bank said Mr Booker had agreed a new contract to lead the business until December 2016.

Mr Booker took over in 2013 following the emergence of a £1.5bn capital shortfall at the bank.

In 2013, the Co-operative Bank uncovered huge losses and narrowly avoided collapse. Its former chairman Paul Flowers was fined for possessing illegal drugs.

'New certainty'

The bank was rescued by a group of investors, mainly hedge funds, who now own the majority of the bank's shares.

Mr Booker, a former HSBC executive, was appointed to turnaround the bank's fortunes.

His contract would have come to an end in June, but has now been extended and his remuneration more closely linked to the bank's performance.

Co-operative Bank chairman Dennis Holt said: "The Co-operative Bank's survival was in doubt when Niall joined the Bank in June 2013 and the progress we have made from that crisis point is in no small part due to his leadership through the turmoil.

"This announcement gives us a new level of certainty and the opportunity to address issues of succession in due course."

The bank's annual results show losses in 2014 were less than half what they were the previous year.

In 2013, the Co-operative Bank made an initial loss of £1.3bn, a figure that was reduced to £632.8m after its debts were restructured.

Co-operative values

The bank said its strategy remained unchanged, focusing on reducing the bank's exposure to risk, making it more resilient and reinvesting in the Co-operative Bank brand.

The closure of a further 57 bank branches will contribute to lower direct retail costs. The bank has also seen a 4% drop in its total number of current accounts.

Mr Booker said: "We have always been clear that the journey to reshape the business would take time but I am confident that our approach to banking is as relevant in today's world as it ever was, and that we remain the bank of choice for anyone who shares the values and ethics which lie at the heart of our business."

Although the Co-operative Group now owns only a minority stake, the bank says it still adheres to the values of the co-operative movement.

The bank says its revised plan is designed to ensure it can withstand a severe economic stress by 2019. It was the only bank to fail the stress tests imposed by the Bank of England in December 2014.

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