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Co Op Bank reveals massive losses

Article By: ,  Financial Analyst
April 11, 2014 10:15 AM

Debate surrounding the future of the Co-Operative Group has increased this morning (April 11th) after the Co-op Bank revealed its financial results for the full year 2013.

It was announced in a statement that the bank lost £1.3 billion last year, even though it lost control of its finances to US hedge funds who led a bank rescue in December.

Co-Op Bank was also the subject of a failed bid to buy hundreds of branches from Lloyds Bank last year, while a £1.5 billion black hole in the bank's balance sheet was discovered in 2013.

Chief executive Niall Booker stated that the bank is not expecting to make a profit in either of the next two years and apologised to its customers. Unlike most banks, the Co-Op is owned by its members, but there has been debate over how democratic this process is and whether or not it needs to be updated for the 21st century.

"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," said Mr Booker.

"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."

Exec pay

Co-Op Bank also announced in its financial results that it will not be paying out millions of pounds to former executives who oversaw its descent into financial difficulties.

However, it was revealed by the bank that Mr Booker is set to receive a £2.9 million pay package each year, as well as a £1.2 million bonus based on the future performance of the bank.

Chris Wheeler, a banking analyst at Mediobanca, told the BBC that the Co-Op's situation is currently "parlous". He added:  "It needs £400 million more capital, [it is] claiming it's going to be a rights issue, The Co-op Group has to put in £120 million."

Co-Op Bank's results come ahead of the release of the latest financial data from parent company the Co-Operative Group, which are due to be released next week.

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