Finally: Co-operative Bank cuts losses ahead of capital raise

 
Emma Haslett
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Co-op Bank Downgraded By Rating Agency Moody's
The Co-operative Bank's chief executive said rescue plans "are on track" (Source: Getty)

The Co-operative Bank's turnaround continues apace, as losses fell in its first half.

The figures

Pre-tax losses fell to £135.2m in the six months to the end of June, from £177m the year before, while total operating expenditure fell 9.9 per cent to £200.8m, from £222.8m the year before.

It wasn't all good news: it shelled out another £4.7m in conduct charges, although that was down from last year's £21.1m, which was mainly related to £9.2m of PPI charges, while current account numbers fell by just under two per cent to 1.4m accounts.

Its total capital ratio fell to 16.8 per cent, compared with 17.7 per cent at the end of 2016.

Read more: City advisers take £15m despite no sale of Co-operative Bank

Why it's interesting

A turbulent few years at the Co-op Bank threatened to come to an end in June, after the lender reached a deal on a £700m rescue package with its hedge fund investors.

Under the deal, designed to help it meet regulatory capital requirements, the Co-op Group's shareholding in the lender will fall from 20 per cent to one per cent, while hedge fund bondholders will write off the £443m they were owed in a debt-for-equity swap which will leave them with a 17 per cent stake.

The hedgies will also help raise an extra £250m through a shares issue, forming a new holding company which will own a 67.6 per cent stake in the Co-op Bank.

Today Liam Coleman, the lender's chief executive, said the plan is "currently on track to conclude by September".

"This will secure the future of The Co-operative Bank as a viable stand-alone entity with greater capital strength enabling a new phase in its turnaround."

Read more: Not for sale: The Co-op Bank has ditched plans to sell up

What the Co-op Bank said

Coleman added:

Business performance in the first half of 2017 has been resilient. Customer satisfaction for the service we provide has increased and we have continued to reduce our cost base. Customer relationships are hugely important to us and the vast majority of customers have remained very loyal as we have progressed the sale and capital raise process and I am extremely grateful for their ongoing support.

Read more: Co-op Bank says it's in "advanced discussions" over capital raise

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