Troubled Co-operative Bank has said it will shed more jobs and close more branches after slipping to a £75.8 million loss during the first six months of the year.
The lender said its full-time workforce had been slashed by 13% since January, while 46 high street locations have closed as it made “encouraging progress” in a large-scale turnaround effort.
While the bank remains firmly in the red, its half-year loss marks a significant improvement on the £844.6m reverse booked for the same period in 2013.
The business had to be rescued when a £1.5 billion hole was discovered in its balance sheet last year. A deal with bondholders, including US hedge funds, saw the wider Co-op group cede majority ownership following a management crisis.
But the bank yesterday said its capital position had improved following a £400m fundraise.
Chief executive Niall Booker said the lender was stronger than it had been a year ago, and ahead of schedule in the sale of unwanted assets.
He also stressed the company was better run at board level, following a scathing report into its near-collapse.
“Considering the scale of the challenge we faced a year ago, we are encouraged by the progress made to ensure the stability of the bank,” Mr Booker said.
“However, the issues we continue to face in building a sustainable business are deep rooted and there remains much to be done.
“Transforming the organisation into a viable and profitable business which generates capital in the long term still requires significant change, both operationally and culturally.”
But the bank, which does not expect to achieve a full-year profit until 2016, was afflicted by customer flight and now plans an effort to “stem the tide”.
Chairman Richard Pym ascribed the net loss of 28,199 current accounts less than 2% of the bank’s total in the period to “negative publicity and significant competitor activity”.
Earlier this year former Treasury mandarin Sir Christopher Kelly pinned the blame for the bank’s near collapse on toxic loans inherited from its disastrous merger with the Britannia building society
It laid bare a “sorry story” of multiple management failures and painted a picture of the bank’s culture in which an “acceptance of mediocrity” took hold.
The business has been at the heart of the wider Co-operative Group’s difficulties as it faced the worst crisis in its long history, during a period which also saw a drugs scandal involving the bank’s former chairman, Paul Flowers.
It was largely responsible for dragging the group to a record full-year loss of £2.5 billion, while its 100% control of the lender shrank to 20%.
The Co-op has since sold its profitable farming business which includes considerable acreage and operations in Scotland to the Wellcome Trust, raising £249m.
The lender said it had formed a committee to consider the feasibility and timing of an initial public offering (IPO) on the stock market, which is expected to meet for the first time next month.
But Mr Booker said the Prudential Regulation Authority had “indicated it would be concerned if an IPO were to distract focus from the primary goal of delivering the bank’s turnaround plan”.
The bank also revealed it had added £39m to its provision for mis-selling and breaches of consumer credit rules, down from £163m in the same period last year.