Co-op Bank says transformation plan ‘materially complete’ ahead of agreed £780m Coventry merger
The Co-operative Bank has said its multi-year transformation plan is “materially complete” as the lender progresses with an agreed £780m takeover by Coventry Building Society.
Co-op Bank has spent the last three years trying to “simplify and transform” the business to deliver sustainable growth, including spending £100m on a new IT system.
Chief executive Nick Slape said in a trading update on Thursday that it had made “significant progress” in its IT programme, with just seven per cent of the bank’s total customers left to migrate.
In another cost-cutting move, Co-op Bank announced in March that it was embarking on a consultation and restructuring expected to result in a net reduction of around 400 roles, around 12 per cent of its workforce.
Slape said on Thursday that “whilst the decision was not taken lightly, it is essential if we are to become a more agile and efficient organisation”.
The 152-year-old lender was rescued from a potential taxpayer bailout in 2013 after it secured a lifeline from American hedge funds to plug a £1.5bn hole in its balance sheet.
Co-op Bank agreed to a further £700m rescue package with investors in 2017, resulting in the bank becoming fully owned by private equity rather than The Co-operative Group.
The bank swung to its first annual in a decade in 2022. Despite a boost from higher interest rates, its bottom line was weighed down by one-off costs last year.
Last month, it agreed terms for a £780m takeover by Coventry Building Society that would return it to mutual ownership, saying on Thursday that “discussions regarding the potential acquisition of the bank are well advanced following completion of substantive due diligence”.
Slape added that he was “very pleased” with the bank’s financial performance during the first three months of 2024, which was “in line with expectations”.
Co-op Bank stuck with its previous 2024 guidance and touted Moody’s decision to upgrade its long-term deposit rating, upgraded to Baa3, or “investment grade”, in March
Slape said: “Our low-risk balance sheet remains resilient, with all key financial metrics and credit quality in line with expectations.
“We are focused on delivering value to our shareholders through the strength of our business model and the hard work of our colleagues.”