Co-op Bank Trims Annual Losses To £264.2m

The troubled Co-operative Bank says it has "stabilised", with losses cut to £264.2m in 2014 though its turnaround plan will result in more branch closures.

It also confirmed, alongside its results, a Sky News story of Thursday evening that chief executive Niall Booker had agreed to stay on until the end of 2016.

Mr Booker took over in 2013 as the Co-op Bank faced the threat of collapse, following the emergence of a £1.5bn black hole on its balance sheet and a wider governance crisis at the Co-op Group, the UK's most prominent mutual.

The disclosure of his new deal and the Co-op Bank's results come three months after it was the only one of eight UK lenders to fail stress tests set by the Prudential Regulation Authority (PRA), an arm of the Bank of England.

The pre-tax loss marked a strong turnaround on the £1.3bn it initially reported for 2013.

The bank said today it had since revised its 2013 loss figure to £688.3m because of a gain to the value of debt on its books.

And the Co-op said that while its recovery was on track, it was to speed up the sale of unwanted assets which included a "closed book" of residential mortgages that were "particularly susceptible to a severe economic stress".

It axed 15% of its staff in 2014 and closed 72 branches.

The bank said it planned to close an additional 57 branches in 2015.

Mr Booker said: "Over the course of 2014 the management team has continued to take significant steps to implement the strategy and to turn the bank around.

"The Co-operative Bank is stronger than a year ago and we end the year with a strengthened capital position, ahead of schedule in the reduction of non-core assets and having made progress reducing underlying costs and improving the day-to-day management and governance.

"However, we are in the early stages of the turnaround and there is still much to do to transform the organisation into a sustainable business.

"There are a number of matters where the bank does not yet meet FCA and PRA regulatory requirements and expectations.

"The revised plan, accepted by the regulators, seeks to address this."

The Co-op said current account numbers fell 4% in 2014 following the bank's much-publicised woes and admitted it faced "considerable work" to recover its market share in a "very competitive" field.

There was concern among customers at hedge funds gaining control of a significant stake under its restructuring.

There was bad PR, too, amid sex and drug revelations concerning the bank's former chairman, Paul Flowers, whose financial competence was questioned by MPs after he failed to correctly state the size of the Co-op Bank's balance sheet.