The Co-operative Bank has admitted the scandal involving former chairman Paul Flowers may have caused “brand and reputational damage” and says it is already losing current account customers as a result.
Ahead of a voting deadline for investors on a proposed rescue deal for the bank today, Co-op Bank says it is too early to assess the extent of the reputational damage caused after Flowers was caught on film buying drugs and chancellor George Osborne ordered an independent inquiry into events at the bank.
In a statement published yesterday, the Co-op Bank said: “Recent events may have caused some brand and reputational damage, but it is too early to form a definitive view as to the extent of such damage.”
It added that this, combined with the introduction of seven-day account switching and increased marketing activity from competitors, “may be a contributing factor to an increase the bank has seen in the switching out of current accounts”.
It added, however, that its retail deposit base remains “broadly stable” and its liquidity position “stable”.
The statement comes ahead of this afternoon’s deadline for Co-op Bank investors to vote on a proposed rescue deal.
The Telegraph reports that votes must be received by today, or investors face a cut of 5 per cent in their future incomes.
If sufficient votes are not received by a later deadline of 6 December, investors could get nothing.
Co-op Bank confirmed last month that it was negotiating a new deal with investors to plug a £1.5bn capital shortfall on its balance sheet.
Under the plan, revised from an initial deal announced in June, Co-op Group would lose its controlling stake in the bank.