The Co-operative Bank is to close another 57 branches this year, resulting in further job losses, after admitting it still has “much to do” to recover from its near collapse in 2013.
The bank closed 72 branches last year with the loss of nearly 1,000 jobs, but said redundancies will be limited to 60 this year as managers get the chop but other bank employees will be redeployed elsewhere.
The group said the cuts will reduce the branch network to 165 branches, down 44 per cent over the past two years. It is not yet clear where the branch closures will be.
The bank’s staff numbers fell to 5,711 last year from 6,704 a year earlier, resulting in the loss of 993 jobs.
The Co-op is trying to recover from a disastrous 2013, when it was hit by a massive hole in its finances, a drugs scandal, an exodus of top executives and a £633m loss.
In 2014 pre-tax losses fell to £264m.
Chief executive Niall Booker said he expects the bank to be loss-making for at least two more years.
The bank lost a net 22,000 current account customers through switching after the debacle although Mr Booker described the decrease as “remarkably small” following the scandals that have engulfed it.
“Inevitably, unfortunately we will see some degree of further headcount reduction.
“Where we have to make difficult decisions we always try to treat our colleagues with dignity, fairness and respect,” said Mr Booker, who has signed a new contract keeping him at the lender until the end of 2016.
Under the terms of the contract, his maximum possible pay package will be £4.97m this year based on “stretching” performance targets.
He was paid £3.1m in 2014 out of a maximum possible £4.3m while in 2016 the maximum will be £4.5m.
Mr Booker raised the prospect of future branch closures as more customers switch to online and phone banking.
“Over time it seems likely the branch network will reduce in line with customers’ increased use of digital channels,” he said.
The bank will also speed up the sale of unwanted assets, mainly through selling a portfolio of residential mortgages called ‘Optimum’.
“Although the bank is stabilising, it is not yet fully docked in the safe harbour,” said Mr Booker.
Last December the bank failed a Bank of England stress test based on how much capital it would be left with in the event of a severe downturn.
It was the only UK lender to fail the test.
As a result it must run down its loan book by £5.5bn by 2018 to shore up its balance sheet.
The disposal of assets will hit future revenues, which means that costs must be cut further.
The bank said its 2014 results were boosted by lower costs as well as a fall in “conduct and legal related charges”, including
compensation for the payment protection insurance (PPI) scandal.
Charges fell from £412m in 2013 to £101m.
• The Co-operative Bank nearly collapsed in 2013 and went on to drag the wider Co-operative group into a £2.5bn annual loss that year after a £1.5bn hole was discovered in the lender’s balance sheet.
It had to be rescued in a deal that saw the overall group’s stake in the lender shrink from 100 per cent to 20 per cent as it ceded majority ownership to bondholders, including US hedge funds.
There was further damage to the bank’s reputation after a drugs scandal involving former bank chairman Paul Flowers, and sharp criticism about how the Methodist minister was appointed to the role despite his lack of experience.
A former Bradford councillor, Mr Flowers was suspended by both the church and the Labour party following allegations
that he bought and used illegal drugs.
It later emerged that he had resigned as a Labour councillor in Bradford after adult material was discovered on his computer.