Co-op Bank pushed to £204m loss as redress costs mount

The bank’s losses have widening against a loss of £77 million reported in the first half of last year and follow a loss of £559 million reported in the first half of 2013.

The Co-op Bank told investors that its capital resilience had been strengthened and it had a common equity tier 1 ratio of 14.9 per cent at 30 June 2015, up from 13 per cent at 31 December 2014 reflecting a reduction in risk weighted assets of £2.5bn.

Just last week it avoided a £120m fine from the Financial Conduct Authority (FCA) over the mismanagement involved in the 2013 crisis, as the regulator accepted that punishing the business would only hinder its efforts to recover.

But Booker said the result was actually slightly better than management had expected and added that the flight of customers which started in 2013 seemed to be coming to an end.

But Booker said: “We have had no meaningful discussions about that”.

During the six months, Co-op Bank had to pay more than £100million to bring its IT systems and other features up to scratch with a modern bank.

The bank said it was now in better shape to withstand economic stresses.

It attributed the decline to the unexpected unwind of £54.3m of fair value adjustments included as part of the bank’s plan, anticipated increased project spend and net losses of £38.2m, predominantly on the sale of non-core assets.

He said: “Of course, we have always said that addressing legacy issues will continue to dominate financial performance for some time and there is considerable work ahead towards a full recovery”.

The bank’s escalating financial woes and chaotic governance following an illfated merger in 2009 with Britannia Building Society were exposed when it announced a £1.5billion black hole in its finances as it tried to buy over 600 branches from Lloyds Banking Group.

Earlier this year, the bank set aside £49 million to cover misconduct and legal charges.

“The transformation of the Bank remains challenging, however, this should not diminish the progress made against our strategic plan”.

In terms of a possible stock market listing, Mr Booker said the bank would need to have a stronger balance sheet before floating.