Black Hole sinks Co-op Bank’s profit hopes
The deal collapsed after a £1.5bn black hole was found in the bank’s balance sheet.
As a result the bank has stated it is highly unlikely that it will return profits prior to 2016 and is currently facing a continued £400m void, which it must cover to in order to meet regulatory requirements.
The parent company, the Co-operative Group relinquished control of the bank, after a number of US Hedge funds brokered a viable rescue deal in December.
Speaking to the BBC, chief executive of the Co-op Bank, Niall Brooker, said: “I would like to apologise to customers, to thank them for their continued loyalty and to thank colleagues for their commitment in such difficult times.”
The bank’s stake fell from 100 to 30% in December’s restructuring deal which left many Co-operative members furious. In an attempt to appease its angered members, the bank has stated that it is withdrawing £4.97m in bonuses to former executives, according to The Times.
Despite these pledges Brooker is still scheduled to receive a pay package of £2.9m, which includes a £1.7m in performance related bonuses.
It is likely that Booker’s bonus package is likely to provoke a hostile reaction, in the face of up to 44 branch closures and large scale job-cuts.
Speculation surrounding the bank’s recovery appears despondent, with banking analyst for Mediobanca, Chris Wheeler claiming that the bank was in a “parlous position.”
Speaking to the BBC, he said: “with such a big capital gap to be filled, and if the Co-op is no longer a major shareholder, one asks the question as to really what is the future style of the bank, because it may no longer be part of the Co-op Group per se.”