Thursday, 29 August 2013 11:13
Co-op Bank post £709m loss and £1.5bn capital shortfall
The Co-operative Bank has seen a loss of £709m in the first half of 2013, up from £57m loss in the first half of 2012.
The firm has had a series of problems recently including pulling out of a acquisition of 632 Lloyds TSB branches in April and the departure of chief executive Barry Tootell in May. Mr Tootell has since been replaced by Niall Booker.
The firm also confirmed a £1.5bn capital hole which the Prudential Regulation Authority has ordered it to fill.
The first step towards this is a capital action plan which includes a proposal for Bank bondholders and preference shareholders to contribute to a recapitalisation plan. It also plans an exchange offer in the fourth quarter of 2013 which it hopes will generate £1bn of capital.
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Mr Booker said: "The underlying issues in the results today are not new, with significant additional impairment charges leading to heavy losses. These were largely driven by a further £496m of impairments on loans, principally the result of a fresh review of non-core assets and partly driven by our developing knowledge and the earlier-than-anticipated disposal of some of those assets.
"We have also further written down our IT assets by £148.4m, taken an additional £61m of provisions for customer redress, including PPI, and there are significant charges of £34.6m."
In total, the Co-operative Group saw a pre-tax loss of £559m, down from a profit of £18m in the first half of 2012.
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The firm has had a series of problems recently including pulling out of a acquisition of 632 Lloyds TSB branches in April and the departure of chief executive Barry Tootell in May. Mr Tootell has since been replaced by Niall Booker.
The firm also confirmed a £1.5bn capital hole which the Prudential Regulation Authority has ordered it to fill.
The first step towards this is a capital action plan which includes a proposal for Bank bondholders and preference shareholders to contribute to a recapitalisation plan. It also plans an exchange offer in the fourth quarter of 2013 which it hopes will generate £1bn of capital.
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Mr Booker said: "The underlying issues in the results today are not new, with significant additional impairment charges leading to heavy losses. These were largely driven by a further £496m of impairments on loans, principally the result of a fresh review of non-core assets and partly driven by our developing knowledge and the earlier-than-anticipated disposal of some of those assets.
"We have also further written down our IT assets by £148.4m, taken an additional £61m of provisions for customer redress, including PPI, and there are significant charges of £34.6m."
In total, the Co-operative Group saw a pre-tax loss of £559m, down from a profit of £18m in the first half of 2012.
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