Britain's Co-operative bank sees progress on turnaround despite 610 million sterling loss

Britain's Co-operative Bank reported a nearly doubled annual loss on Friday to 610 million pounds ($875 million), as it shed unwanted assets at a loss in a bid to restore itself to viability following its near-demise in 2013. The loss, up from 264 million the previous year, also came from an increase in conduct and legal risk charges to 193 million pounds from additional provisions against the mis-selling of payment protection insurance, the bank said.
The bank said that despite the loss it was making progress on its turnaround plans, improving its core equity Tier 1 capital ratio, a key measure of financial strength, to 15.5 percent from 13 percent at the end of 2014. The statutory loss and the low interest rate environment mean the bank will take a year longer than expected to reach the levels of capital strength required by regulators, the bank's Chairman Dennis Holt said in the lender's annual report.
The bank will also stop selling assets in its so-called Optimum portfolio that had been earmarked for disposal, Holt said, in a new plan that has been accepted by the Prudential Regulation Authority. Co-op Bank nearly collapsed in 2013 with a 1.5 billion pound hole in its capital after losses from problem real estate loans. Bondholders ultimately took control of the bank, while its longstanding owner, the mutual Co-operative Group , became a minority holder.
Since then Co-op Bank has embarked under CEO Niall Booker on a turnaround plan that has seen it slash its branch network by nearly half and sell billions of dollars worth of loans. Progress on that plan has been tough, Booker said last August, as the lender's half-year loss nearly trebled amid falling income, rising costs and losses from asset sales. Booker's contract runs until the end of this year and the lender has not yet announced a replacement to take over the task of restoring the bank to profitability.