Co-operative bank apologises for £1.3bn annual loss

The boss of the Co-op Bank has apologised for its past failings as it reported losses of £1.3 billion and warned a return to the black was unlikely before 2016.

Niall Booker, who became chief executive in June, said the bank still had "significant issues" to resolve, having come close to collapse last year following the discovery of a £1.5 billion hole in its balance sheet.

It emerged today that Mr Booker will be paid up to £2.9 million this year to lead the turnaround plan, on top of the £1.7 million he has already received.

We appreciate that customers and other stakeholders continue to feel angry about how past failings placed the future of the business so seriously at risk.

I would like to apologise to them, to thank them for their continued loyalty and to thank colleagues for their commitment during such difficult times.

– Co-op chief executive Niall Booker

The potential sum of £4.6 million for 18 months' work is near to the £5 million in deferred bonus payments that Co-op Bank said today it plans to withhold from former directors who were at the institution prior to its demise.

The bank has been at the heart of the wider group's current difficulties, in a year that also saw a drugs scandal involving former bank chairman Paul Flowers.

Despite the turmoil, Mr Booker said customers stayed loyal to the bank last year, with the number of current accounts up slightly to 664,775 and retail deposits down by less than 1% at £27.9 billion.

Niall Booker says management "kept the bank alive" during its troubles. Credit: Reuters

The Co-op Group now owns 30% of the bank after a rescue that saw control handed to bondholders in a move avoiding the need for a taxpayer bailout.

However, the bank still needs another £400 million from shareholders in order to cover additional legacy issues, such as the cost of PPI redress.

If the wider Co-op Group, which is still the largest shareholder in the bank, chooses not to take part in the proposed fundraising it will see its own interest in the business shrink again.

Mr Booker, a former HSBC executive, said he was "very confident" the bank will secure the funds, even if the Co-op Group does not participate in the cash call.