Britain's Cooperative Bank logs huge loss, scraps bonuses

Britain's crisis-hit Co-operative Bank posted a vast annual loss on Friday and axed bonuses for former executives who had left prior to its near-collapse. Operating losses ballooned to £1.28 billion ($2.15 billion, 1.54 billion euros) in 2013, from £674.9 million in 2012, hit by rising bad debts and charges related to misconduct and legal issues, Co-op Bank said in a results statement.
Net losses grew to £748.9 million from £509.1 million last time around, but the 2013 figure was skewed by an accounting gain stemming from its rescue deal.
The company added it will not pay £4.97 million in deferred bonuses to former employees as performance measures had not been met. Co-op Bank expressed confidence that investors would inject another £400 million of capital, despite warning it would not make a profit in 2014 or 2015.
Chief executive Niall Booker, who was appointed in June to help turn the lender around, apologised to customers and investors for its past failings that had placed the future of the business seriously at risk.
"The results today reflect the magnitude of the issues that have come to light since I joined the Co-operative Bank ten months ago," said Booker in the earnings release.
Co-op Bank was plunged into crisis last year after regulators ordered it to increase its capital cushion by £1.5 billion.
The bank was subsequently forced to hand control to US hedge funds in a restructuring aimed at plugging the vast black hole. Co-operative Group, a British financial services-to-food mutual business, retained a 30-percent stake in its former banking division as part of the rescue deal.
The crisis deepened in November after Co-op Bank's former chairman Paul Flowers, a Methodist minister, was filmed allegedly planning to buy illegal drugs. The bank now faces a series of investigations into what went wrong with the business, and ongoing questions over the appointment and suitability of Flowers. In a fresh twist last month, Co-op Bank revealed it needed another £400 million of capital to help meet higher-than-expected compensation costs for the mis-selling of certain financial products.
The British bank, which had 4.7 million customers at the end of December, added on Friday that shareholders were "supportive" of the new capital raising.
One year ago, the Co-op Bank axed a deal to purchase 632 branches from Britain's part-nationalised Lloyds Banking Group, blaming the poor economic climate and increasing regulatory requirements for the decision.