Co-op Bank Keen To Extend CEO Booker's Deal

The chief executive of the Co-operative Bank is in talks about extending his contract amid continuing pressure from regulators for management continuity at the top of the embattled lender.

Sky News understands that Niall Booker, who took over at the Co-op Bank in 2013 as it faced the threat of collapse, is likely to remain in his role beyond the expiry of his existing deal in June 2015.

An announcement about his position is expected to be made in the next few weeks, according to insiders.

A 12 or 18-month extension are possible outcomes, they said.

Mr Booker, a former head of HSBC's North American operations, is understood to have had a difficult relationship with some of the bondholders who became major Co-op Bank investors as part of its rescue restructuring just over a year ago.

The lender was the only one of eight banks to fail stress tests conducted by the Bank of England in December.

As a consequence of that failure, the Co-op Bank postponed a vote on incentive awards for Mr Booker and senior colleagues because the proposals “include measures which may no longer be appropriate".

There have been no subsequent disclosures about revised terms for those payouts, although details may emerge alongside or soon after the Co-op Bank's annual results.

Some of the US hedge funds which now control a majority of the Co-op Bank's equity have pressed for Mr Booker to work to restructure the organisation more aggressively, insiders say.

However, Mr Booker is understood to have the backing of the Prudential Regulation Authority (PRA), which is said to be keen not to see further management turnover.

The bank has put a £6bn portfolio of former Britannia Building Society mortgages on the market, and investors are likely to be updated on the progress of that process in the coming months.

A date has not yet been finalised for the Co-op Bank's full-year results, although insiders say they are likely to be announced by the end of next month.

At the time of the stress test failure, Mr Booker said: "We have achieved the target of building our capital base and the actions we have taken during the first year of our business plan have made the Bank more secure for the benefit of all stakeholders.

"Our key ratios around capital, liquidity and leverage at the present time are significantly strengthened, we’re ahead of schedule in the disposal of Non-core assets and the stability of our core franchise is improving.

"However, given we are in the early stage of our plan, the original capital deficit and the nature of our assets, it is no surprise that we have not met the severe stress test hurdle."

The Co-op Bank was plunged into financial chaos even as it attempted to pursue a takeover of 632 Lloyds Banking Group branches.

Its former chairman, Paul Flowers, brought the bank into disrepute when his drug-taking and sexual activities were exposed by a tabloid newspaper, while his financial competence was questioned by MPs after he failed to correctly state the size of the Co-op Bank's balance sheet.

Mr Booker's own private life was the focus of attention from the tabloid press last year.

A spokesman for the Co-op Bank declined to comment.