The Co-operative Bank has reported losses of £709m for the first half of the year as it presses ahead with controversial plans to plug its £1.5bn capital shortfall.
The half year results show losses were driven by £496m of loan writedowns and £61m related to further consumer redress payments, including PPI misselling. It compares to losses of £57m for the same period in 2012.
The results also reveal the bank is pressing ahead with plans to address its £1.5bn capital shortfall, including the proposal for bondholders and preference shareholders to exchange their holdings for equity in the bank. An exchange offer has been organised for November to agree to the so-called “bail in” flotation.
An action group of Co-op bondholders has attacked the plans, which have already seen investors have their income payments delayed from July to November. Co-op has previously stated that the delayed payments will be made if investors agree to the exchange offer.
Group chief executive Euan Sutherland says: “We are asking affected bank bondholders and preference shareholders to contribute to a recapitalisation plan that we believe is in the best long-term interests of the stakeholders in the group and the bank.
”We have assessed all the available options and we believe the capital action plan will prevent the more severe adverse consequences for all stakeholders which might occur in the absence of this plan and our support of it.”
He adds: “While I recognise the concerns of affected bank bondholders and preference shareholders we remain confident that under the plan announced we are doing all we can to deliver the best solution for the future of the bank – something that is in the longer-term interests of all stakeholders.”