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Co-op announces losses of £1.3bn


The Co-op bank has apologised to its 4.7 million customers after announcing annual losses of £1.3bn for 2013.

Although large losses were expected, the announcement has raised fresh concerns over the future of the bank as it does not expect to make a profit in 2014 or 2015.

Niall Booker, Chief Executive of the Co-operative bank was the first to apologise on behalf of the organisation. He said: "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.

"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."

Branch Closures

The bank has also announced that up to 40 of its high street branches will be closing this year, which will most likely mean that jobs will also have to be cut.

This news comes after the bank attempted to buy 632 branches from Lloyds Bank in 2013, before a £1.5bn black hole was uncovered in the Banks balance sheet, forcing the deal to collapse.

Another ‘Black Hole’

As its annual report and account has highlighted mounting losses, it is now attempting to raise £400m in order to cover up another black hole discovered in its accounts – a result of an influx of PPI mis-selling claims and a lapse in the provision of mortgages.

The bank will therefore need to pay £114m in compensation to customers overcharged on mortgage repayments. Additionally, £110m has been set aside to cover breaches of the Consumer Credit Act, and a further £103m to compensate customers who were mis-sold payment protection insurance (PPI).


The bank has said it will not be paying £5m of bonuses to former executives, but will still pay Mr Bookers £2.9m pay packet, which includes £1.7m of performance related bonuses.

Additionally, Mr Booker could receive a further £1.2 in bonuses as part of a three year incentive based plan – dependant on the future success of the business.

Deposit guarantee scheme safeguards customer’s savings

Whilst the future of the bank is questionable, Co-operative customers’ money is safe. This is because savers in the UK are protected by the ‘deposit guarantee scheme’, guaranteeing that the first £85,000 of money with a single bank or building society is safe, even if the bank goes out of business.

Breathtakingly value-destructive

Lord Myners, the former Labour City minister was brought in as an independent director of the bank, and was tasked of leading a full review of the entire business.

However, it has emerged that he has since resigned from this position as his initial findings showed that the group’s directors had made “breathtakingly value-destructive" decisions.

He said that many of its directors did not have the relevant business experience, and were therefore not qualified to maintain the direction of senior managers. As a result his recommendation was that a new group board of directors should be appointed.

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