Co-op Bank: No profit this year or next as chief apologises to customers

Harriet Green
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Co-op Bank has, as expected, reported that it made a £1.3bn pre-tax loss last year.

The struggling lender also says it doesn’t expect to make a profit this year or next.

Payouts to former executives who quit having been linked to the collapse of the bank will be cut by £5m, it added, and chief executive Niall Booker will receive a pay package of £1.2m, along with a further £1.7m dependent on the capital strength of the bank and another £1.2m payable over a three year period if the bank meets targets laid out under its long term incentive plan.

His remuneration is tied to the performance of the lender, so could lead to questions being asked. Booker himself has said there will be "no payment for failure", reports the FT.

The bank's CET1 ratio is now at 7.2 per cent.

Kamal Ahmed, the BBC’s business editor, said on the Today programme this morning that the bank will likely be trying to promote the bad news as relative, given its current situation. The results were published following two previous delays.

It’s attempting to raise £400m from investors, after being hit by hundreds of millions of pounds in fresh mis-selling compensation claims.

A £1.5bn black hole was discovered in the lender's balance sheet last year, and the Co-operative Group gave up control to US hedge funds back in December.

Earlier this week came the shock resignation of board executive Lord Myners, which was, of course, preceded by the drugs scandal concerning ex-chair Paul Flowers.

Today, Booker apologised to customers for past failings, saying there are still "major hurdles" to overcome:

We appreciate that customers and other stakeholders continue to feel angry about how past failings placed the future of the business so seriously at risk. I would like to apologise to them, to thank them for their continued loyalty and to thank colleagues for their commitment during such difficult times.

Booker also announced the bank will be asking for its customers' opinions as it "renews [its] values and ethical principles".

He added that the level of change required is "significant", but that it's "determined to rebuild trust in the Bank after the events of last year and reward the loyalty our customers and shareholders have shown us."