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| Co-op Bank reports loss of £477m in 2016 as sale looms | Co-op Bank reports loss of £477m in 2016 as sale looms |
| (about 4 hours later) | |
| The Co-operative Bank has reported an annual loss of £477m in 2016 as it continued to be hit by “legacy issues” of the past and rock-bottom interest rates. | |
| The latest results are an improvement on 2015, when the bank posted losses of £610m. | The latest results are an improvement on 2015, when the bank posted losses of £610m. |
| However, the bank’s merger with the Britannia Building Society had cost the firm 50 per cent more than expected – £180m rather than the £120m booked last year. | |
| The troubled lender, which has about four million customers, said it was engaging with potential bidders after putting itself up for sale last month in a bid to bolster its capital buffer and meet key regulatory targets. | |
| Chief executive Liam Coleman on Thursday said he was “pleased” with the response so far from suitors following the group’s move to launch a sale process amid concerns over its balance sheet strength. | |
| “Since 2013 considerable progress has been made fixing the problems of the past and the bank is now in a very different position than it was in 2013 and stronger in many areas,” Mr Coleman said. | |
| “Obviously, we are only a few weeks into the sale process but we are pleased with the interest to date and engaging with potential bidders as planned” | |
| The bank has had a turbulent few years and in 2013, narrowly avoided collapse after problematic real estate loans left a £1.5bn hole in the bank’s capital. | The bank has had a turbulent few years and in 2013, narrowly avoided collapse after problematic real estate loans left a £1.5bn hole in the bank’s capital. |
| Bondholders effectively took control of the bank at the time, while the mutual Co-operative Group became a minority shareholder. | Bondholders effectively took control of the bank at the time, while the mutual Co-operative Group became a minority shareholder. |
| In September last year the Co-operative Group wrote down its valuation of its stake in the bank by £45m. In April, the bank had said that it would remain unprofitable for the next two years citing losses from asset sales and rock-bottom interest rates. | In September last year the Co-operative Group wrote down its valuation of its stake in the bank by £45m. In April, the bank had said that it would remain unprofitable for the next two years citing losses from asset sales and rock-bottom interest rates. |
| It has also warned that the economic uncertainty following the UK’s vote to leave the EU may hold back its recovery plans and last month it said that it expected its core capital ratio – a key measure of balance sheet health, to slip below 10 per cent, falling short of a regulatory requirement. | It has also warned that the economic uncertainty following the UK’s vote to leave the EU may hold back its recovery plans and last month it said that it expected its core capital ratio – a key measure of balance sheet health, to slip below 10 per cent, falling short of a regulatory requirement. |
| Additional reporting by PA | Additional reporting by PA |