The Co-operative Group has posted its first annual loss since 2013, falling into the red by as it wrote off the value of its stake in the Co-op Bank.
The group reported a pre-tax loss of £132m, compared with a £23m profit in 2015, after a £74m rise in its finance costs, reflecting changes in the value of its bonds and a writedown in the value of its 20 per cent stake in the Co-Op Bank, which has dropped from £185m to zero.
The company called it a "prudent valuation", saying:
Given that the bank is in a sale process, the consideration to be received for our share is obviously volatile and potentially has a large range of options and we believe this is a prudent valuation.
The Co-op Bank announced in February it was putting itself up for sale; up until then it had been pursuing an ambitious turnaround plan after a £1.5bn hole was found in its accounts in 2013. It nearly collapsed at the time, but was helped by a group of US investors. Under that deal, the Co-operative Group retained a 20 per cent stake in the bank.
The bank has said outside factors such as the lower-for-longer interest rate environment had hindered its plans to raise capital organically.
It is due to close its first round of bidding later this month. The wider group said it was "supportive of the process" the bank was going through to find "a secure home" for members who use its services.
Also in February, Co-op boss Richard Pennycook, who was brought in when the firm was in the worst of its crisis during 2013, stepped down as chief executive. Steve Murrells, who had been running the company's food business, took over.