Co-op Bank faces new demands from watchdog as losses double

The Co-operative Bank has reported a pre-tax loss of £610m for 2015, more than doubling its losses of £264m a year ago and bringing it under fresh pressure from regulators to accelerate an overhaul of its business three years after it nearly collapsed.

In its annual results published today, conduct and legal risk charges increased to £193m from £101.2m for the year due to higher provisions for missold payment protection insurance.

According to reports from Sky News the Prudential Regulation Authority (PRA), the main banking watchdog, ordered the Co-op Bank to resubmit elements of its business plan ahead of today’s results announcement which showed cost reduction measures last year that saw the bank close 58 branches with another 54 set to go in 2016.

Overall the bank cut 18 per cent of its staff to 4,470 people.

The measures led to a £76m reduction in costs year-on-year but costs remained high at £492m in 2015.

Co-op Bank almost collapsed in 2013, after bad property loans left a staggering £1.5bn capital shortfall. It lost 38,000 customers the following year.

However, the bank said the actions taken to improve its finances made it much stronger than a year ago.

Chief executive Niall Booker said: “In 2015 we have been successful in improving capital resilience, reducing costs and strengthening the performance of the core bank and the expected widening of our financial loss compared with 2014, due to legacy issues we have known about and highlighted for some time, should not distract from the considerable progress made in turning the bank around.”

Earlier this week it was reported that Stephen Jones, a former Barclays and Santander UK executive, has been tapped up by the Co-op Bank’s board as a potential successor to Mr Booker but has not yet accepted the role.