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Co-op Bank reports £709m losses

Co-op Bank reports £709m losses

Category: Banking

Updated: 29/08/2013
First Published: 29/08/2013

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The Co-operative Bank has reported a pre-tax loss of £709 million for the first six months of this year.

The bank said the heavy losses were due to its write-off of £496 million of bad loans that mostly relate to Britannia Building Society, which the bank merged with in 2009, as well as its bill for compensating customers who were mis-sold payment protection insurance and the cost of an IT system that was designed to replace the bank's existing platform, but which will no longer be implemented

The bad results were widely anticipated.

Over a month ago, the beleaguered bank hit the headlines when the Prudential Regulation Authority (PRA) confirmed that it faced a capital shortfall amounting to £1.5 billion, which the PRA has said must be filled.

Unlike rescue plans carried out at the height of the credit crisis, which relied on help from taxpayers, The Co-operative Bank will instead raise capital via a 'bail in' process, whereby shares in the bank will be offered to existing bondholders. Shares will also be listed on the stock market.

The Co-operative Group, which owns the bank, is also expected to provide extra capital to help make up the shortfall.

Next month, the Group is set to launch an independent investigation into failings at the bank.

"There are no quick fixes here," said the Group's chief executive, Euan Sutherland, when announcing the results.

"This will be a challenging four-year turnaround that begins with our comprehensive plan to restore the bank to stability… This will be a major transformation that will rely on the continued support of our customers, members and colleagues."

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