The Co-operative Group has posted a pre-tax loss of £559m in the first half of 2013 following additional impairment charges in its banking division.
The banking arm of the group reported a pre-tax loss of £709.4m in the 26 weeks to 6 July 2013, compared to a £58.6m loss in the same period in 2012.
Niall Booker, banking group chief executive, admitted that “significant” impairment charges had resulted in heavy losses in the first half of the year.
“These were largely driven by a further £496m of impairments on loans, principally the result of a fresh review of non-core assets and partly driven by our developing knowledge and the earlier-than-anticipated disposal of some of those assets,” he added.
The Co-operative Bank has also written down its IT assets by £148.4m and set aside a further £61m of provisions for customer redress, including payment protection insurance.
Euan Sutherland, group chief executive of the Co-operative Group who was appointed in May, said his first few months in the role have been focused on putting a recovery plan in place for the bank.
It follows the discovery of a £1.5 billion capital shortfall in the bank’s balance sheet, which banking regulator the Prudential Regulation Authority has said it must plug.
But Sutherland warned “there are no quick fixes here” as he reiterated its four-year turnaround plan to restore the banking division to “stability”.
The Co-operative Bank reported a fall in new business lending in the period, with loans to businesses totalling £0.5 billion, down from £0.7 billion a year earlier after its decision to stop lending to large corporates in light of its recapitalisation plan.
In the first half of 2013, the bank accessed £900m from the government’s Funding for Lending Scheme.