11th April 2014
Embattled business the Co-operative Bank has revealed it made a massive £1.3bn loss in 2013 and is unlikely to return to profitability until 2015 writes Philip Scott.
The group, which has endured a raft problems an over the past year, has apologised to its customers.
Niall Booker chief executive at the bank, said the results “reflect the magnitude of the issues that have come to light” since he joined the Co-operative Bank 10 months ago.
In a statement accompanying the results, he 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.”
The results reveal a catalogue of errors which have led to total redress provisions for the year of £411m.
Some £114m relates to failings in the way Co-op Bank administered its mortgage business including potential customer redress of:
£29m relating to the processing of initial mortgage payments;
£31m relating to mortgage fees;
£22m on secured arrears;
£19m in arrears charges; and
£13m relating to mortgage documentation.
The rest of the Co-op Bank’s redress provision relates to £103m for missold payment protection insurance, £33m for missold interest rate swaps, and £109m for breaching consumer credit rules on when customers are liable to pay interest.
Last year a deal where Lloyds was set to snap-up more than 600 of its branches collapsed after the beleaguered Co-op Bank uncovered a £1.5bn hold in its finances.
Last month it emerged that the bank is to go cap-in-hand to investors to raise some £400m in a bid to ensure it does not break capital adequacy requirements.
The group, also endured a downgrade from ratings agency Fitch last year from B to –B.