Co-operative Bank says it will make no profit until 2017

Co-operative Bank signImage source, PA

The troubled Co-operative Bank says it will not make a profit for another two years as it reports another loss.

Pre-tax losses for the first six months of the year were £204.2m, compared with losses of £77m a year earlier. The figure was slightly better than expected.

It said it was now in better shape to withstand economic stresses.

The bank almost collapsed in 2013 after a huge black hole was discovered in its accounts.

The Co-op Bank was owned by the 150-year old Co-operative Group until it had to be rescued in 2013 following the discovery of a £1.5bn black hole.

In that year, it contributed £2.1bn of losses of £2.3bn - the largest in the Co-operative Group's 150 year history.

The group had to seek outside investors to prop up the bank, which is now 80% owned by hedge funds, with the remainder held by the Co-op Group.

No profits

One option under consideration is to float shares on the stock market in an initial public offering (IPO).

But its chief executive, Niall Booker, said it was unlikely to embark upon a stock market listing until it was closer to making profits.

But he said that was not something that would happen in the near future: "We won't be profitable in 2015 and we won't be profitable in 2016 either."

In the first half of 2015, the bank set aside £49m to cover misconduct and legal charges, lost £38.2m on sales of assets needed to reduce the bank's overall levels of debt, and spent an extra £33.1m on improving "systems and processes".


Last week, a regulatory report criticised the bank for misleading investors. The bank escaped a fine, however, because the regulator said it needed all the money it has to strengthen its balance sheet.

At the end of last year, the bank failed a Bank of England stress test, designed to test banks' ability to withstand another financial crisis.

The black hole discovered in 2013 has been linked to losses on commercial property loans, stemming from Co-op Bank's 2009 merger with the Britannia building society.

A number of top executives then left the bank, including former chairman Paul Flowers who left the bank following a drugs scandal.

Before the discovery of financial problems, Co-op Bank was being lined up by the government to take over more than 600 branches of Lloyds Bank, a plan that was then abandoned.

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