CEO says 'journey ahead will take time'
Co-op cuts losses but customers close accounts as branches cut
Chief executive Niall Booker, who was appointed two years ago at the height of its near-collapse, will stay on until the end of next year to help complete a turnaround plan.
He said that this “journey” will take time and the bank admitted today that it had suffered from customers switching, with a 4% fall in current accounts held over the year.
Mr Booker continues to work on strengthening its balance sheet after it failed the last round of stress tests imposed on the sector by the Prudential Regulation Authority. It expects to have a plan in place to meet a “severe economic test” by 2019.
It reported a pre-tax loss of £264.2 million for 2014 after revising its 2013 loss figureof £1.3 billion to £688.3m because of a gain to the value of debt on its books.
The company will close a further 57 branches this year on top of the 72 that shut last year. It axed just under a thousand staff to bring the full-time equivalent payroll down to 5,711.
After seeing a fall in the number of current accoiunts, the company admitted: “There remains considerable work ahead to re-establish the bank’s market share in a very competitive current account market.”
The capital position strengthened following the capital raising and the capital injection from The Co-operative Group. Its Common Equity Tier 1 (a measure of reserves) has increased from 7.2% in 2013 to 13% at the end of 2014.
Mr Booker said: “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.
“Improving the resilience of the Bank remains key to delivering our revised plan.
“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.”