Turnaround plan progressing says Co-operative Bank

Co-Operative Bank.
Co-Operative Bank.
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The Co-operative Bank said it was making continued progress in a sweeping turnaround plan aimed at derisking its balance sheet and focussing on individual and small business customers.

In a first-quarter trading statement, the British bank said it had completed a £1.5bn residential mortgage securitisation earlier this month as part of a broader deleveraging plan to improve its resilience.

This securitisation would have increased the bank’s core equity tier one capital position at December 31 by approximately 0.9 per cent to 13.9 per cent, the bank said.

Co-op said it was on track to hit revised deleveraging targets as set by regulators following Bank of England stress tests as well as deal with legacy conduct issues.

Chief executive, Niall Booker, said: “There is considerable work ahead to address legacy issues across all areas of the business.

“Furthermore, the Bank remains exposed to external macroeconomic conditions, including the timing of future interest rate rises and market conditions to support successful asset disposals, but we are pleased with the progress management has made in the areas we control and in what remains the early stage of our recovery.”

It is planning a range of measures to further reduce costs in 2015 through improved processes, outsourcing some back office functions and shrinking its ATM network.

The bank’s current account franchise remained broadly stable throughout the first quarter of 2015 and net interest income rose slightly ahead of expectations due to a number of pricing actions on retail deposits that lowered funding costs.

Mortgage applications and completions over the period exceeded expectations, with completions totalling £500m.