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| Co-op Bank apologises and confirms £1.3bn losses | Co-op Bank apologises and confirms £1.3bn losses |
| (35 minutes later) | |
| The Co-operative Bank has confirmed it made a loss of £1.3bn for 2013. | |
| The losses, in line with expectations, come after the bank's failed bid to buy 632 branches from Lloyds Bank last year. | The losses, in line with expectations, come after the bank's failed bid to buy 632 branches from Lloyds Bank last year. |
| The deal collapsed after the discovery of a £1.5bn black hole in the Co-op Bank's balance sheet. | The deal collapsed after the discovery of a £1.5bn black hole in the Co-op Bank's balance sheet. |
| Parent company the Co-operative Group lost control of the bank to US hedge funds that led a bank rescue in December. | |
| The bank said it did not expect to make a profit in 2014 or 2015. | The bank said it did not expect to make a profit in 2014 or 2015. |
| It also apologised to its 4.7 million customers. | It also apologised to its 4.7 million customers. |
| Co-op Bank chief executive Niall Booker said: "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. | Co-op Bank chief executive Niall Booker said: "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." | "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." |
| The bank said it would not pay out £5m to former executives who left the bank after its near collapse last year. | |
| But Mr Booker will receive a £2.9m pay package and £1.2m bonus based on the future performance of the bank. | But Mr Booker will receive a £2.9m pay package and £1.2m bonus based on the future performance of the bank. |
| It said up to 40 of its high street branches will close, which is likely have an impact on jobs, although the bank has yet to put a figure on the number of posts under threat. | |
| The results were published after two earlier delays. | The results were published after two earlier delays. |
| In March, Co-op Bank was forced to admit it had found another £400m black hole in its finances, forcing it to issue new shares in an attempt to raise the funds from investors. | In March, Co-op Bank was forced to admit it had found another £400m black hole in its finances, forcing it to issue new shares in an attempt to raise the funds from investors. |
| The shortfall became apparent after the discovery of additional costs related to past misconduct and poor documentation. | The shortfall became apparent after the discovery of additional costs related to past misconduct and poor documentation. |
| The biggest part of the additional costs relate to payment protection insurance (PPI) mis-selling and lapses in the provision of mortgages. | The biggest part of the additional costs relate to payment protection insurance (PPI) mis-selling and lapses in the provision of mortgages. |
| The bank said it would pay £114m to compensate customers who had been overcharged on mortgage repayments, | The bank said it would pay £114m to compensate customers who had been overcharged on mortgage repayments, |
| It has also set aside £110m to cover breaches of the Consumer Credit Act and £103m to compensate customers mis-sold payment protection insurance (PPI). | It has also set aside £110m to cover breaches of the Consumer Credit Act and £103m to compensate customers mis-sold payment protection insurance (PPI). |
| Small businesses that were mis-sold complex interest rate hedging products will collectively receive £33m in compensation. | Small businesses that were mis-sold complex interest rate hedging products will collectively receive £33m in compensation. |
| The Co-op Bank's additional rights issue has also triggered speculation that the Co-op Group's remaining 30% stake could be diluted, because it would struggle to find additional funds to maintain its shareholding. | The Co-op Bank's additional rights issue has also triggered speculation that the Co-op Group's remaining 30% stake could be diluted, because it would struggle to find additional funds to maintain its shareholding. |
| Rescue | Rescue |
| In December, the bank was the subject of a dramatic £1.5bn rescue deal that saw its parent company, the Co-operative Group, lose control of the bank to a group of US hedge funds, | In December, the bank was the subject of a dramatic £1.5bn rescue deal that saw its parent company, the Co-operative Group, lose control of the bank to a group of US hedge funds, |
| They took a 70% stake in the bank. | They took a 70% stake in the bank. |
| Chris Wheeler, a banking analyst at Mediobanca, told BBC the bank was in a "parlous position". | Chris Wheeler, a banking analyst at Mediobanca, told BBC the bank was in a "parlous position". |
| He said: "It needs £400m more capital, [it is] claiming it's going to be a rights issue, The Co-op Group has to put in £120m. | He said: "It needs £400m more capital, [it is] claiming it's going to be a rights issue, The Co-op Group has to put in £120m. |
| "So, big capital gap to be filled, and if the Co-op is no longer a major shareholder, one asks the question as to really what is the future style of the bank, because it may no longer be part of the Co-op Group per se." | "So, big capital gap to be filled, and if the Co-op is no longer a major shareholder, one asks the question as to really what is the future style of the bank, because it may no longer be part of the Co-op Group per se." |
| He also questioned whether members of the Co-op Group would want to put more money into the bank, suggesting the Group might chose to protect its other businesses, which include the supermarket chain Somerfield and the Co-operative funeral home business. | He also questioned whether members of the Co-op Group would want to put more money into the bank, suggesting the Group might chose to protect its other businesses, which include the supermarket chain Somerfield and the Co-operative funeral home business. |
| The Co-op Group itself has been forced to delay the publication of its annual results, following the departure last month of its chief executive, Euan Sutherland. | The Co-op Group itself has been forced to delay the publication of its annual results, following the departure last month of its chief executive, Euan Sutherland. |
| The Group's losses are expected to be about £2bn. | The Group's losses are expected to be about £2bn. |
| Mr Sutherland left after it was revealed he had described the group as "ungovernable" in a Facebook post. | Mr Sutherland left after it was revealed he had described the group as "ungovernable" in a Facebook post. |
| Earlier in March, details of his basic salary of £1.5m, including a retention bonus of another £1.5m, were leaked to the press. | Earlier in March, details of his basic salary of £1.5m, including a retention bonus of another £1.5m, were leaked to the press. |
| On Wednesday, it emerged that former Labour City minister Lord Myners, who had been drafted in by the Co-op Group in December to lead a review of the business, had resigned his position on the board of directors. | On Wednesday, it emerged that former Labour City minister Lord Myners, who had been drafted in by the Co-op Group in December to lead a review of the business, had resigned his position on the board of directors. |
| Lord Myners was appointed as an independent director by Co-op Group chair Ursula Lidbetter in December, to undertake a full review of the entire business. | Lord Myners was appointed as an independent director by Co-op Group chair Ursula Lidbetter in December, to undertake a full review of the entire business. |
| 'Breathtakingly destructive' | 'Breathtakingly destructive' |
| His initial findings showed the group's elected directors had overseen "breathtakingly value-destructive" decisions, among which were the Co-op's takeovers of Britannia building society and supermarket chain Somerfield. | His initial findings showed the group's elected directors had overseen "breathtakingly value-destructive" decisions, among which were the Co-op's takeovers of Britannia building society and supermarket chain Somerfield. |
| He also found its three-tier system of elected member representation - made up of area committees, regional boards, and the group board - had "consistently produced governors without the necessary qualifications and experience to provide effective board leadership". | He also found its three-tier system of elected member representation - made up of area committees, regional boards, and the group board - had "consistently produced governors without the necessary qualifications and experience to provide effective board leadership". |
| Too many directors, he said, did not have any serious business experience and were therefore not qualified to keep senior managers in check. | Too many directors, he said, did not have any serious business experience and were therefore not qualified to keep senior managers in check. |
| Instead, he recommended new group board directors should be appointed according to clear criteria of skills and experience. | Instead, he recommended new group board directors should be appointed according to clear criteria of skills and experience. |
| But some of the Co-op's most influential members are worried that the changes could damage the group's values. | But some of the Co-op's most influential members are worried that the changes could damage the group's values. |