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Troubled Co-op Bank slashes pre-tax losses in the first half
Are the Co-operative Bank's troubles finally over? After a dire 2013, the bank announced this morning it had cut pre-tax losses to £75.8m in the six months to the end of June. That's less than a tenth of last year's £844.6m.
Last summer, the bank went into a period of crisis after it uncovered a £1.5bn capital hole, but having sold £1bn of assets and cut 13 per cent of permanent staff, this morning chief executive Niall Booker – who was parachuted in when previous boss Ewan Sutherland left suddenly in April – said he was "encouraged by the progress made".
By the measures of capital and liquidity the bank is considerably stronger than it was a year ago. We are ahead of schedule in the disposal of non-core assets and have improved governance, particularly at board level.However, the issues we continue to face in building a sustainable business are deep rooted and there remains much to be done.
Booker added that although he did not expect to achieve a full-year profit until 2016, the bank was making progress in fixing its core tier one capital ratio, which rose to 11.5 per cent, from 7.2 per cent during the same period last year.
Earlier this year, the bank raised £1.9bn through a debt-for-equity swap, during which a group of hedge funds became its primary investors. In March, it uncovered another charge – this time a £400m bill for misselling payment protection insurance – and was forced to ask its investors for more cash.
After the debt-for-equity swap, there had been concerns the bank would move away from its "ethical" image – but this morning it reassured customers its focus for the second half will be on implementating plans to "reshape the bank" around retail and small business customers. It added it expects to publish the results of its "ethical policy poll", which was taken by over 73,000 customers, in the autumn.