Login Register

Co-op Bank faces "huge Challenges

By MIG: Leek Post and Times  |  Posted: August 29, 2013

Karen Bradley

Comments (0)

Staffordshire Moorlands MP Karen Bradley has warned that the Co-op Bank, which took over Leek based Britannia Building Society in 2009, faces “huge challenges”.

The move comes after figures just released show the bank has lost £709 million in the first half of this year.

Mrs Bradley said: "The Co-op obviously continues to face huge challenges, but I am pleased that a credible plan has now been put into place to stabilise the bank.

"I cannot say that I am overwhelmingly supportive of the move to recoup losses from bondholders, but I do hope that the rescue will be successful so that investors will receive the interest they are owed in the longer-term. 

Related content

"The Co-operative team have a tough four years ahead and it is important that they are given the support they need to get on with the job."

The Co-op had previously stated that the bad loans had related mostly to Britannia Building Society.

The capital shortfall came to light during Co-op Bank's attempts to buy more than 600 bank branches from the partially state-owned Lloyds Banking Group. A deal was initially agreed in 2012, but fell through earlier this year.

Chairman of the Co-op Bank Richard Pym said: "These are the first results I have had to introduce since I became chairman of The Co-operative Bank on June 5 2013 and there is no hiding that they are disappointing.

"Niall Booker, our new chief executive, joined the Bank on June 10 2013. Together, and with the wider board and management teams, we are required to address the issues the Bank is facing, which were reported in the 2012 year end results and continued to impact the financial performance for the first half of 2013.

"We now have a plan to strengthen the capital position of the Bank and we are also progressing plans to simplify and rebuild the Bank focused on serving the needs of individuals and small business customers.

"In our announcement on June 17 2013, we noted that significant additional impairment charges were expected for this current financial year and the results today have been primarily driven by credit impairment on the non-core corporate assets.

"The question of “what went wrong?” is very relevant and we have asked Sir Christopher Kelly to undertake a comprehensive independent review into the events that led to the Bank announcing a £1.5 billion capital shortfall. The findings of Sir Christopher Kelly’s review will be reported by May next year.

"The aim of that review is to independently establish the facts, and speculation is a diversion from finding out the truth, and repairing the Bank’s financial position and reputation."

Read more from Leek Post & Times

Do you have something to say? Leave your comment here...

max 4000 characters