The Co-operative Bank has put itself up for sale
The Co-operative Bank has put itself up for sale after making "considerable progress" on its turnaround plan that saved the lender from near-extinction in 2013, it said this morning.
A number of US hedge funds came to the rescue of the ethical lender four years ago, bailing it out after the lender revealed losses of £600m and a capital shortfall of £1.5bn.
The funds – which include Aurelius, Silverpoint and Monarch – swapped debt for equity positions with previous parent, the Co-operative Group, reducing its stake to just 20 per cent.
But today Co-operative Bank said it had made "considerable progress implementing its turnaround plan, with a customer-focused retail bank being rebuilt".
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Since 2014, it has reduced its cost base by over 20 per cent, sold over half its original non-core portfolio, and made critical IT improvements. Meanwhile it said it had improved its risk management and operational resilience.
It added that many of its major legacy issues of the past, such as PPI claims, "have largely been addressed".
Chairman Dennis Holt said:
We are now commencing a sale process, alongside other options. The bank's ethical heritage and customer proposition will be a central consideration in this.
However, the bank's chief executive, Liam Coleman, said the turnaround had been hampered by lower for longer interest rates. He added: "Since 2013, we have successfully addressed significant legacy issues, reduced the cost base and rebuilt our franchise and customer proposition.
"The Co-operative Bank delivers an attractive banking proposition that is differentiated by our values and ethics and is highly valued by our 4m customers. Customers value the Co-operative Bank and our ethical brand is a point of difference that sets us apart in the market."
Read more: About-turn? Co-operative Bank losses shrink
A spokesperson for the Bank's prudential regulation authority (PRA) – responsible for the prudential regulation and supervision of the UK's banking sector – said:
The PRA welcomes the actions announced today by the Co-operative Bank. We will continue to assess the bank’s progress in building greater financial resilience over the coming months.
Holt added: “The bank has met its Pillar One regulatory capital requirements continuously since 2014 and expects to continue to do so. At the same time, since we began work on the bank's turnaround, the board has always been clear that we would need to build capital for the future."