Co-op Bank looks for merger as it posts profit

Nick Slape

Manchester-based Co-operative Bank — recently rebuffed by Spain’s Banco Sabadell in an audacious £1 billion approach for its TSB Bank subsidiary — on Friday posted a third straight quarter of profits.

The self-styled ethical bank has recovered well from its own scandals in recent years which led to a rescue by a group of hedge funds and investment firms.

Co-operative Bank reported statutory profit before tax of £28.5 million for the nine months to September 30, compared to a £68.1 million loss over the same period last year.

Total income for the nine months rose 16% to £259.2 million.

Co-operative Bank CEO Nick Slape told reporters the company is still looking for merger deals.

“We have an organic plan that works … but we are looking at opportunities,” Slape told a London newspaper.

“We are looking at things on paper, but they have got to be doable.

“The more we can do ourselves, the more we can be prepared to take opportunities when they arrive.”

On the chances of the TSB deal still happening, Slape said: “never say never.”

Slape said Co-operative Bank has “sophisticated ambitious shareholders” that are willing to put new money into the business.

In April 2021, Co-operative Bank said that US private equity firms J.C. Flowers and Bain Capital Credit agreed to buy a stake in the bank from an existing investor, hedge fund BlueMountain.

In the bank’s trading update on Friday, Slape said: “I am delighted to report a third consecutive quarter of underlying and statutory profit.

“Total income has increased by 16% and customer net interest margin has risen to 157bps from 144bps year-on-year.

“Costs have reduced by 8% to £244m on an underlying basis, and have reduced by 14% on an unadjusted statutory basis to £250m year-to-date.

“We have generated a further £1.1bn of gross mortgage lending in the quarter, taking the total in 2021 to £4.1bn.

“Net residential lending now stands at £2.2bn for 2021 and is equivalent to a 13% increase in mortgage balances with a strong pipeline as we enter the final quarter of the year.

“In our SME segment our major investment programme is on track and this quarter we relaunched the business banking website which now provides tailored support to businesses based on their circumstances.

“This also includes providing enhanced support to start ups with a Business Concierge service, ongoing relevant information on how to respond to Covid-19 challenges, fraud awareness and protection information and finally access to our award winning request to pay app Incomeing, in partnership with Bankifi.”