22nd August 2014
Beleaguered Co-operative Bank has managed to slash its pre-tax losses to £75.8 million in the first half of the year, down from £845 million a year ago.
The bank, which was forced to the brink of collapse last year after a £1.5 billion blackhole was discovered in its accounts, has also cut staff numbers by 13% in the first six months of the year.
Co-op Bank chief executive Niall Booker said: ‘Considering the scale of the challenge we faced a year ago we are encouraged by the progress made to ensure the stability of the bank.’
News that the bank has cut its losses so dramatically will come as little comfort to the Co-op bondholders who were forced to bail the bank out. The investors, who held permanent interest-bearing shares (Pibs) – a type of bond which paid interest and the return of the original investment after a set period of time, were asked to choose between interest payments and the repayment of capital.
As part of the bailout plan, the Co-operative Group, the bank’s parent company, surrendered most of its share of the bank to seven hedge funds who each took a 10% stake in the bank.
With the financial woes of the bank in full swing, it was further hit when its chairman Paul Flowers was arrested over drug allegations.
In April the bank confirmed it had made a loss of £1.3 billion in 2013 and in the most recent half year results, Booker reiterated that the bank was not expected to make a full-year profit until 2016 but that governance had been improved.
Earlier this month the Co-operative Group announced it will shake-up it board structure to bring in experienced people to oversee its affairs. The group will replace the lay members of its board with experienced and independent directors after criticism about the ability of the board members to run a bank when they had no experience of doing so.