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Co-operative Bank results show it made a loss of £1.3 billion for 2013 - and its chief executive Niall Booker apologises

By Leek Post and Times  |  Posted: April 11, 2014

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THE head of the Co-operative Bank has apologised to its customers and stakeholders after it announced it a loss of £1.3 billion for 2013.

The bank, which took over the Leek-based Britannia Building Society in 2009, added it does not expect to make a profit this year or in 2015.

The losses come after the bank's failed bid to buy 632 branches from Lloyds Bank last year.

The deal collapsed after the discovery of a £1.5 billion hole in the Co-op Bank's balance sheet.

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Parent company the Co-operative Group lost control of the bank to a group of US hedge funds that launched a rescue deal in December.

Co-op Bank chief executive Niall Booker told its 4.7 million customers: "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 bank said it would not pay out £5 million to former executives who left the bank last year.

However, Mr Booker will receive a £2.9 million pay package – a basic salary of £1.2m and up to £1.7m in performance related bonuses.

Mr Booker could also receive £1.2m as part of a three year incentive plan based on the business’s future performance.

The bank, which employs around 900 people in Leek, said up to 40 of its high street branches will close this year, which is likely have an impact on jobs.

Last month, the bank admitted it had found another £400 million hole in its finances, forcing it to issue new shares in an attempt to raise the funds from investors.

The biggest part of the additional costs relate to payment protection insurance (PPI) mis-selling. The bank said it would pay £114 million to compensate customers who had been overcharged on mortgage repayments,

It has also set aside £110 million to cover breaches of the Consumer Credit Act and £103 million to compensate customers mis-sold payment protection insurance (PPI).

Mortgage customers will continue to make their monthly repayments as normal

Last June, 7,000 people who held bonds with the Britannia Building Society were told they faced losses owing to restructuring

Staffordshire Moorlands MP Karen Bradley said: “The Co-op’s latest results are very disappointing, though entirely to be expected.

“The silver lining to the black cloud is that the core business has turned out to be relatively stable and ordinary customers are remaining loyal to the brand, despite its difficulties.

“As I have said before, the most important thing for the Co-op now is to make sure that the recapitalisation plan succeeds and that employees and customers are treated properly.

“That is going to be a huge challenge for the new management team, but I think that the new Chief Executive of the bank, Niall Booker, has struck the right tone by apologising for previous mistakes today.”

John Gorle, National Officer for the Co-op at the Usdaw union, said: “The problems at the Co-operative Bank have been a real concern for some time and we were saddened to see the Co-operative Group lose control of it, which raised many questions over the future ethos and strategy of the bank and on the wider Group’s businesses.

“In addition to the problems with the bank the much publicised instability at main board level with recent resignations over the future direction and governance of the Group is causing more uncertainty for our members.

“Adding to that uncertainty are the rumours of job losses and the proposal to sell the retail pharmacy business.

“Whilst there will be no quick fix for the problems at the Group there is a growing anxiety with our membership over long-term job security going forward.

“The Co-op needs to present a clear and coherent strategy for the future as soon as possible to help address our members concerns.

“Usdaw has over 50,000 members that work for the Co-operative Group in retail, distribution, funeral care, pharmacy and at Head Office.

“We are working closely with the Co-op to do everything we can to ensure these other parts of the business remain successful to protect our members’ jobs.

“The Co-op’s biggest asset has always been its loyal hardworking staff, many of whom have spent their whole working life in the business, and they will be the key to its success in the future.”

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