Low interest rates and legacy issues meant the Co-operative Bank continued to make a loss as its searches for a buyer.
The bank shed £477.1m last year, compared to a loss of £610.6m in 2015, as the business continues to be hurt by low interest rates and issues such as costs from its merger with Britannia Building Society.
Staff cuts and branch closures helped the bank reduce operating costs by £47.1m to £444.8m, but this could not offset the £76.7 loss of income due in part to the Bank of England’s 0.25 per cent interest rate cut after Britain’s vote to leave the European Union.
Low interest rates have also meant the bank has struggled to strengthen its capital position.
Chief executive Liam Coleman said the bank is in better shape than it was in 2013 following efforts to stabilise the business and rebuild its image as a “renewed, digitally-enabled bank for the future”.
The bank was plagued by scandal in 2013 when then-chief executive Paul Flowers was forced out of the bank on a number of criminal charges, leaving it with a £700m in the first half of the year an £1.5bn hole in its finances.
That year it was rescued by a group of hedge funds after it emerged it had a capital shortfall of £1.5bn and is currently 20 per cent owned by The Co-operative Group.
The bank announced in February that it had out itself up for sale after it had struggled to strengthen its capital position and warned that it might not meet its capital reserve targets in the medium term.
Mr Coleman said the bank has made progress in its turnaround plan despite the number of headwinds it has faced.
“In 2016 we began to see the tangible results of our turnaround plan. New product development, digital transformation and brand marketing have all contributed to the re-establishment of an attractive proposition.”
Its common equity tier 1 ratio was down by 4.5 per cent overall in 2016 to 11 per cent due to its statutory loss after tax, causing its total capital ratio to drop 3.9 per cent to 17.7 per cent.
julia.fauschou@ft.com
