Britain’s loss-making Co-operative Bank said it was confident of raising the extra funds it needs to secure its future even without the backing of customer-owned parent, the Co-operative Group.
The country’s eighth-biggest lender today confirmed it lost £1.3 billion last year and warned it would not make a profit this year or next. The bank, which fell under the control of bondholders including US hedge funds last December after a £1.5 billion capital shortfall was exposed, said in March it needed another £400 million to cover the cost of past misconduct.
The future of the Co-operative Group, whose activities range from supermarkets to farms, is also in doubt following the resignation yesterday of independent director Paul Myners, whose plans to reform Britain’s biggest mutual had met with resistance from members.
The Co-operative Group, which owns 30 per cent of the bank, has yet to decide whether to take part in the latest fundraising. “I’m confident we’ll raise the £ 400 million even if the group does not participate. Shareholders are very, very supportive and I really, really think that we’re going to get this through the gate,” Chief Executive Niall Booker said today.
Co-op’s other major investors, which include hedge funds such as Perry Capital, Beach Point Capital and Silver Point Capital, were not immediately available to comment.
Banking industry sources say they have little choice but to come up with more money or risk losing the £1.2 billion they have already put in. Booker was speaking after the bank confirmed the 2013 loss and said it would not honour bonuses worth £5 million that were due to be paid to its former bosses. He apologised to the bank’s 4.7 million customers for its troubles, which were exacerbated when former chairman Paul Flowers was arrested last November as part of an investigation into the supply of illegal drugs.
“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,” he said. Despite the negative publicity, Co-op Bank said the number of customers using the bank for their main personal current account rose slightly in 2013.
Reuters
