The Co-operative Bank will go bust unless it can push through a £1.5billion rescue plan, bosses warned today as the parlous state of its finances were laid bare.
Group chief executive Euan Sutherland said he was sorry as its latest results revealed its banking arm racked up £709m of losses in the first half of this year, largely as a result of bad loans and bad IT systems. But he said he was “confident” that bondholders will approve a rescue package, which will see them losing £500m in exchange for a third of the shares in a re-capitalised bank. The Co-op will provide the remaining £1bn, and Mr Sutherland warned there was “no plan B”.
Staff at the bank are now braced for job losses as a turnaround plan is implemented. Mr Sutherland said a review of all the group’s operations - from supermarkets to funeral providers and pharmacies, which would have made nearly £160m profit were it not for the bank - was under way.
Co-op this year failed to buy 600 branches from Lloyds, and while it was lauded for its focus on customers, behind the scenes there was turmoil as it grappled to integrate the business with Britannia Building Society, whose bad loans have largely been blamed for its problems.Reuse content