Co-op Bank trims losses to £135m but sheds another 25,000 customers
10 August 2017
Troubled lender the Co-operative Bank has narrowed half-year losses, but continued to shed banking customers and borrowers amid uncertainty ahead of its recent rescue deal.
The group said it lost around another 25,000 current account customers since the end of last year, while it also saw £400 million of instant access savings cash pulled out.
It confirmed it was partly hit by "retail customer reaction to uncertainty" surrounding the £700 million deal secured in June with its hedge fund investors - a move that will spell the end of its historic relationship with the Co-operative Group.
Chief executive Liam Coleman insisted the Co-op Bank had put in a "resilient" performance in its first half, with losses trimmed to £135.2 million for the six months to June 30 from £177 million a year earlier.
He added: "The vast majority of customers have remained very loyal as we have progressed the sale and capital raise process and I am extremely grateful for their ongoing support.
"Of course there is more hard work ahead, and, like other banks, we recognise there are risks to the UK economy, but this is a great bank and we are positive about the future."
Under the refinancing package agreed with its hedge funds, which is expected to complete in September, the wider Co-op Group’s stake in the bank will shrink from 20% to around 1%, with the lender also agreeing to separate itself from the wider mutual’s pension scheme.
But the bank will keep the Co-op branding and has pledged to retain ”values and ethics at its heart”.
The deal will give Co-op Bank the ability to meet regulations on long-term capital requirements, avoid it being wound down and allow it to continue as a stand-alone lender.
Soaring inflation caused by the collapse of the Brexit-hit pound has pushed up shop prices for hard-pressed consumers, leading retail sales to slump.
Shares in DFS tumbled by more than 7% to 214p in morning trading.
Neil Wilson, senior market analyst at ETX Capital, said: “Certainly consumer spending, which was remarkably robust in the six months after the EU referendum, has started to suffer.
“Sofas are probably the first to suffer as they require a commitment from the buyer to pay a certain amount each month. This requires job security and rising earnings.
“While the employment rate has remained extremely robust, real earnings are not so good, meaning it’s a lot tougher for people to afford that extra monthly commitment.”
Kirsty O’Connor/PA Wire