Manchester’s up-for-sale Co-operative Bank said on Thursday its statutory loss before tax, still impacted by legacy issues, was reduced to £477.1 million in 2016 compared to a loss of £610.6 million in 2015.
The so-called “ethical” bank — hit by a number of scandals in recent years — was rescued by hedge funds in 2013, but last month put itself up for sale amid a neeed to build its capital and meet longer term UK bank regulatory capital requirements.
On Thursday, the bank said that if a sale of the bank did not happen, it would seek to raise up to £750 million of additional core capital.
“As an alternative to a sale, the bank’s plan seeks to raise an additional £700 million to £750 million …” said Co-operative Bank.
“Whilst the structure, terms and timing are to be finalised, this may be achieved via a liability management exercise involving the potential exchange of the bank’s debt securities to equity … alongside an additional primary equity capital raise of approximately £300 million.”
Co-operative Bank CEO Liam Coleman, said: “In 2016, we continued to deliver significant progress against our turnaround plan rebuilding a customer focused retail bank with strong levels of new mortgage business, growing current account numbers and a distinctive ethical brand; but at the same time we faced a number of challenges.
“The historically low interest rate environment, legacy issues and the cost of the scale of transformation required continued to impact on the performance of the business.
“Today’s results reflect those factors, which led to the board’s decision to commence a sale process and to look at other options of building capital, and they also demonstrate there is clear potential to build our unique franchise in the future …
“The announcement of a sale and consideration of other options to build capital is therefore about how the bank sees through the next stage of its turnaround plan.
“Obviously, we are only a few weeks into the sale process but we are pleased with the interest to date and engaging with potential bidders as planned.
“This is a great retail bank and one that is valued by our four million loyal customers.
“We believe there is opportunity and potential to build on the progress made and on our distinctive ethical position.”