Member Article

Co-op Bank continues ruthless cut-backs to offset losses

Co-operative Bank, which is headquartered in Manchester, is continuing to feel the pressure from industry regulators as it announces plans to make significant cut backs to offset losses.

As a result of store closures and general downsizing, the bank has seens a reduced pre-tax loss of £264.2m, compared to £632.8m for 2013.

In 2014, the banks reduced its branch network by 72 branches in 2014 and earlier this year, it announced plans to close a further 57 branches in 2015.

The bank has continued to be ahead of schedule in the disposal of non-core assets with an overall reduction of these assets from £12.5bn at the beginning of the year to £10.3bn at year end.

This move followed the bank’s failure of The Bank of England’s Stress Test, during which Co-op Bank stated it ‘does not expect to be profitable in 2014, 2015 and 2016’.

The bank saw an Increase in project costs to £226.5m, from £164.7m in 2013, as a result of increased investment in IT and infrastructure.

Co-op’s chief executive Niall Booker, who has been appointed CEO until December 2016, believes the bank is in a transitional phase, he said: “Over the course of 2014 the management team has continued to take significant steps to implement the strategy and to turn the Bank around.

“The Co-operative Bank is stronger than a year ago and we end the year with a strengthened capital position, ahead of schedule in the reduction of Non-core assets and having made progress reducing underlying costs and improving the day-to-day management and governance.

“However, we are in the early stages of the turnaround and there is still much to do to transform the organisation into a sustainable business. There are a number of matters where the Bank does not yet meet FCA and PRA regulatory requirements and expectations. The revised plan, accepted by the regulators, seeks to address this.

“The performance of the Core Bank has begun to stabilise, and we aim to build on this in 2015 by continuing to invest in our brand and developing our products guided by our expanded Ethical Policy.

“We have always been clear that the journey to reshape the business would take time but I am confident that our approach to banking is as relevant in today’s world as it ever was, and that we remain the bank of choice for anyone who shares the values and ethics which lie at the heart of our business.”

This was posted in Bdaily's Members' News section by Ellen Forster .