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The Co-op Group chief, Euan Sutherland, has acknowledged that the first half of this year has been "difficult" but insisted the plan to restore the banking arm to health remains on track.
The new banking regulator has said it anticipated today's losses at the Co-op Bank and that it will hold it to the plan announced in June to rebalance its balance sheet.
The Co-Op Bank has suffered a string of problems, contributing to more than £709 million in losses in the first half of this year and a £1.5 billion capital hole in its balance sheet.
- In 2009, it merged with Britannia Building Society which brought millions of pounds worth of bad loans onto its books
- In April, it abandoned plans to take on 632 former branches of Lloyds due to the "current economic climate"
- In May, Moody's credit ratings agency downgraded the bank to "junk" status, followed quickly by the resignation of its chief executive
- In June, the bank announced a so-called 'bail in' whereby investors had their money swapped for shares
The £509 million pre-tax losses are driven by £709.4 million losses in the Co-operative Bank, which has struggled to recover from bad loans taken on before the credit crunch.
The group announced today that has written off £496 million of "loan impairments".
But the banking losses still dragged down the profits reported in the group's supermarket arm.
The Co-operative Group plunged to pre-tax losses of £559 million in the first six months of the year due to heavy losses in its banking arm.