After almost collapsing in 2013 after a 1.5bn black hole was discovered in its balance sheet, the Bank of England and the Financial Conduct Authority concluded that the scandal was severe enough to warrant significant fines. However, the regulators decided not to levy the fines as it would harm the banks recovery.
This move followed on from 2014 reports, which claimed the bank could go bust at any time. And as its results were published, the bank issued an apology and warned that a return to profit was unlikely before 2016.
However, CEO Niall Booker recently claimed the banks performance will remain dominated by legacy issues”, until as far as 2017.
Net losses rose to 204m in the first six months of 2015, compared with a loss of 77m in the same period a year ago. The Co-operative Bank has also closed a total of 165 branches.
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According to Booker, a 28 per cent decline in the number of in-branch transactions is to blame, as customers have increasingly engaged with the bank online.
“Broadly, the number of branches we are cutting reflects the number of transactions that are taking place in branches,” he said. “That is not a sustainable level of reductions, because we took a fairly big whack at the branches early on, but it is consistent with what you are seeing elsewhere in the market.
“I suspect that as generational change takes place and people access the bank digitally, the number of branches will continue to fall.”
He suggested that financial losses are bound to get bigger. One option under consideration is to float shares on the stock market in an IPO.
Booker said, however, that the move would likely be postponed until the bank was closer to making profits.