Co-op Bank boss in line for £5.8m despite warnings of more losses

Stricken lender to claw back nearly £5m from former staff including Paul Flowers

Associate Business Editor

The Co-operative Bank will hold back nearly £5m in pay from former executives after it unveiled a £1.3bn loss and admitted that it would not make money for at least two years.

The move came as the bank sought to damp down controversy over the package awarded to its current chief executive, Niall Booker, which could hit a maximum of £5.8m for just 18 months’ work.

His deal includes salary and pension of £790,000, a further £943,000 of so-called “allowances” linked to the bank’s continuing survival – paid at a monthly rate of £140,000 – and a £1.2m “long-term” share package. This year’s package is worth £2.9m.

The bank’s survival is dependent on a £400m cash call on existing shareholders, who have already recapitalised the bank once. It admitted that a failure to raise the money would  compromise its status as a “going concern”.

While some commentators described the bank as being on the brink, analysts from Espirito Santo said the results were in line with expectations, although they were admittedly low.

Included in the chamber of horrors were £516m of impairment charges, mostly from operations now viewed as non-core, conduct and legal charges of £412m, and IT and deferred tax writedowns of £148m and £158m respectively.

It is these issues that have contributed to the money being withheld from former bosses. Among them is Neville Richardson, former chief executive, who will miss out on £238,000. His successor, Barry Tootell, forgoes £497,500, plus £512,500 forfeited when he resigned. The  second two instalments payable to former chairman Paul Flowers under a £95,000 deal agreed when he quit will be withheld.

The bank is now facing a gruelling battle to survive and admitted that a host of problems could yet knock it off course. But Mr Booker said he was confident that the rescue money could be raised. It is not yet clear whether the Co-operative group – which still owes the bank more than £250m from its earlier re- capitalisation – will participate in the cash call.

Speaking to The Independent, Mr Booker said he would be with the bank for a relatively short period to get it back on its feet and ensure that its new strategy of focusing on personal  banking customers and small business in the UK was working successfully. The former HSBC banker said he had “other opportunities” when he joined and his pay was now tied to the survival of the bank. “It is a fairly short-term exercise. Once stabilised there are better and cheaper options to run the bank,” he said.

His chairman, Richard Pym, said he recognised that “ the levels of remuneration being discussed will cause concern but it is important to remember that the state the bank is in has nothing to do with the present management team. They were brought in to keep the bank alive and turn the business around.”

Mr Booker refused to comment on the bank’s relationship with the Labour Party, though it would appear to be “non-core” given the new strategy.

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Guru Careers: Communications Exec / PR Exec

£25 - £30K: Guru Careers: We are seeking a highly-motivated and ambitious Comm...

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral