Troubled lender The Co-operative Bank saw its annual pre-tax losses more than double to £610.6m, but it still managed to boost its chief executive’s pay by a quarter.
The bank saw its losses spiral in the year to the end of December from £264.2m a year ago, as it suffered from volatile markets and low interest rates.
However, chief executive Niall Booker saw his pay jump by 25 per cent in the same period to £3.85m, as he benefited from long-term incentive awards.
The bank also lost 300,000 customers in the period as they were tempted away from the business, which prides itself on its ethical stance. It now has 4.1 million customers.
The lender said its losses stem from the previous management in place when it nearly collapsed in 2013 after a £1.5bn black hole was discovered in its balance sheet.
Since Mr Booker joined the lender almost three years ago, the firm has sold off risky assets and slashed branches in a bid to get the business back in shape.
The bank said last year it cut operating costs by 13.5 per cent to £491.9m, as it closed 58 branches and cut full-time staff by 18.5 per cent to just under 4,500.
It said it plans to close a further 54 branches this year.
The lender said losses at its core bank, the parts of the business not affected by the discovery of the black hole, narrowed to £14.9m from £78.6m a year ago.
Mr Booker said the group has been “successful in improving capital resilience, reducing costs and strengthening the performance of the core bank.”
He added: “Whilst the bank as a whole will report a loss before tax in 2016 and 2017, we expect a return to operating profitability in the core bank before the end of 2017.”
The Co-op Bank failed a Bank of England stress test in December 2014, a key measure of capital strength, which assesses the ability of major UK lenders to withstand another financial crisis.
Mr Booker said since then the bank has cut its non-core assets by half and raised £250m of capital to strengthen its balance sheet. Chairman Dennis Holt said the firm was “optimistic about the viability of the core bank franchise”.
He added: “The transformation required to rebuild The Co-operative Bank as a viable alternative to other UK banks is not an easy task.”
Mr Booker said that he enjoyed the challenge of the ‘triage phase’ of dealing with a distressed lender, but gave no indication he might stay on beyond the end of the year. His contract runs until the end of this year and the chairman said there was no update on succession.
As well as the large hole in its balance sheet, the Co-operative Group was also engulfed by scandal after controversial former chairman Paul Flowers, who was a Methodist minister, was filmed buying class-A drugs and later fined for drugs possession.
Following its crisis, the Co-operative Bank had to be rescued by bondholders including US hedge funds in a move which saw the wider Co-op group’s ownership of the bank reduced to a 20 per cent stake.