Co-op Group posts £559m losses

The Co-operative Group has recorded pre-tax losses of £559 million for the first six months of the year. Its banking arm lost £709.4m, wiping out profits from its supermarkets.

Co-op chief executive: There are no quick fixes

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.

This has been a very difficult first half for The Co-operative Group and the results highlight both the well-documented challenges faced by The Co-operative Bank and the significant work to do at Group level.

Importantly, today’s announcement also underlines the need for the £1.5bn Capital Action Plan we announced in June to stabilise the Bank, which we reaffirm today and which remains on track ...

There are no quick fixes here. This will be a challenging four-year turnaround that begins with our comprehensive plan to restore the Bank to stability ...

– euan sutherland, chief executive, co-op group

Read: Co-op boss talks to ITV News about bank's 'bail-in'

Banking regulator 'anticipated' Co-op Bank losses

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 Prudential Regulation Authority [PRA] anticipated the likely scale and source of these losses when it made its assessment of the bank’s capital position in June.

Consequently, the announcement today does not affect the PRA’s assessment that the Co-operative Bank has a capital shortfall of £1.5bn relative to 7% core equity capital after adjustments.

– Bank of England spokesperson

Read: The Co-operative Bank: Another bank black hole

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Co-op Bank losses are latest in a string of misfortunes

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.

More: The Co-operative Bank: Some facts and figures

£709m losses at Co-op Bank wipe out profits

The Co-op Bank is struggling with bad loans taken on before the credit crunch
The Co-op Bank is struggling with bad loans taken on before the credit crunch Credit: Rui Vieira/PA Wire

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.