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Co-operative Bank to cut 350 jobs and close 18 branches after Covid hit

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Despite seeing an increase in net interest income, thanks to higher interest rates, the bank saw costs increase significantly which dented its bottom line.
Despite seeing an increase in net interest income, thanks to higher interest rates, the bank saw costs increase significantly which dented its bottom line.

The Co-operative Bank will lay off around 350 employees and shutter 18 branches as it struggles to deal with the economic fallout from the coronavirus pandemic, it said today.

The lender said that record-low interest rates put in place to try to spur the economy had squeezed its income.

“We are very sorry to announce this news today,” said Co-operative Bank chief executive Andrew Bester.

“Unfortunately, we’re not immune to the impact of recent events,” he said. “Which means it’s important we reduce costs and have the right-sized operating model in place for the future.”

Co-operative Bank became the latest UK high-street business to lay off workers in response to the dire state of the economy.

Marks & Spencer said last week that it would cut an enormous 7,000 roles over the next three months. Boots and Pizza Express are among the countless big names to have announced sharp reductions.

Interest rate cuts squeeze UK banks

The UK economy shrank by 20.4 per cent in the second quarter of the year. That was by far the worst performance since records began after World War II. And it was one of the worst figures of any country in the world.

The Bank of England slashed interest rates in March to record lows in a bid to stimulate lending. But low rates have dented lenders’ profitability.

Banks traditionally make money by lending at a higher rate than they borrow, but interest rates on loans have been squeezed.

The Co-op Bank said the “period of prolonged economic uncertainty ahead” was also a major factor in its decision to cut jobs and close branches.

It said that aside from the specific branches affected, the cuts are expected to focus on middle management positions and head office roles.

The planned branch closures are expected to be completed by 1 December 2020. Co-op Bank said the branches have been chosen “following careful analysis of individual branch footfall over a 12-month period” prior to Covid.

The 18 branches proposed for closure are: Ashton; Bradford; Cambridge; Chatham; Chester; Chichester; Canada; Dartford; Halesowen; Harrogate; Luton; Oxford; Rotherham; Solihull; Truro; Wakefield; Walsall; York.