This year will mark a “turning point” for the Co-operative Bank, its chief executive has said, with the UK lender on track to report its first annual profit in a decade.
The bank, which has 3.2 million personal customers, 95,000 business clients and 50 branches across the UK, said pretax profits had reached £28.5m for the nine months to 30 September, having swung from a loss of £68m during the same period in 2020.
It benefited from a rise in mortgage lending, which totalled £1.1bn in the third quarter. Demand has been fuelled by the temporary stamp duty holiday and the race for larger homes during the Covid-19 pandemic.
The figures suggest the bank’s turnaround plan is bearing fruit. The chief executive Nick Slape – who became bank’s sixth chief executive in nine years when he took over in 2020 – cheered the results and said the bank was finally putting its legacy issues to rest. He said 2021 was shaping up to be “the turning point year for the bank”, which “hasn’t made an organic profit on its own … for a decade”.
The Co-operative Bank has struggled to return to profit since 2011, and had to be rescued by hedge funds in 2013 after £1.5bn hole was discovered in its accounts after the disastrous 2009 takeover of the Britannia building society.
Its reputation also suffered after the bank’s former chairman, the former Labour councillor and Methodist church minister Paul Flowers – known as the Crystal Methodist – pleaded guilty to possession of cocaine, crystal meth and ketamine in 2014.
A group of hedge funds took full control from the Co-operative Group after launching a £700m rescue deal in 2017. The group – which includes Silver Point Capital, GoldenTree, Anchorage Capital and Cyrus Capital and fund manager Invesco – collectively owns 85% of the bank, with the remainder held by a range of undisclosed institutional investors.
Slape said the Co-operative Bank was considering new takeover targets after making a failed offer – reportedly worth £1bn – to acquire its rival TSB last month. The offer was ultimately rebuffed by TSB’s Spanish owners, Sabadell.
“It’s not something they want to do at this time,” Slape said. “But they know that we are interested at the levels that we indicated. I would love for it to happen. I think it’s very compelling opportunity in the UK market.”
“Beyond that, there are other options [which could include] assets and portfolio sales.2