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Fears after Co-op loses £709 million

By MIG: Leek Post and Times  |  Posted: September 04, 2013

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FEARS for the future of jobs and the Britannia premises in Leek have been raised after the Co-op Bank last week announced a £709 million loss for the first half of the year.

Leek Town mayor John Fisher said assets of the company could now have to close, while Moorlands MP Karen Bradley said the bank faces "huge challenges".

Following the news the Coop has invited the leader of Staffordshire Moorlands District Council, Sybil Ralphs, to attend a meeting with senior management later this month.

Mr Fisher said: "I am now very concerned about the losses which is being blamed on Britannia.

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"Assets will have to be closed which could include part of the Leek site. The future is not bright. I hope the planned review will bring out what has gone wrong."

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.

"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."

Council leader Sybil Ralphs, who also has the responsibility for regeneration on the authority, said she had been asked to attend a meeting with the Co-op management later this month.

She said: "This is of course a matter for the company, but any loss of jobs in the Moorlands is very concerning and I fully understand that this must be very worrying and uncertain times for the staff involved.

"I am having a meeting with the Co-op later this month to discuss the plans and I am also working with the Stoke-on-Trent and Staffs Local Enterprise Partnership to see how we can together support any staff affected by these proposals."

The Co-op had previously stated that the bad loans had related mostly to the former 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.

Richard Pym, chairman of The Co-operative Bank, said: "These are the first results I have had to introduce since I became chairman of The Cooperative 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."

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