|More bad news: The Co-operative Bank has had a year to forget|
The crisis-hit Co-operative Bank lost up to £1.3billion last year after being hit with costly blunders.
The scale of the losses was revealed as the bank confirmed plans to go cap-in-hand to investors for £400million to shore up its capital cushion.
The plea to its biggest shareholders came as the lender was forced to set aside funds to cover “conduct and documentation” issues from the past.
These include more funds for payment protection insurance mis-selling, but also the way initial mortgage payments were taken, how interest was charged, interest rate swap mis-selling and problems with third party insurance.
Co-op bank boss Niall Booker said: “As a result of this continuing review, we are unearthing a range of issues which the new executive team is having to address.”
The additional cost is a setback for the Co-op as it struggles to get its house in order following the discovery of a £1.5billion funding black hole and drug taking allegations levelled at its former banking chairman, the Rev Paul Flowers.
The Co-operative Group, which lost control of the bank in the wake of the funding debacle, will have to stump up another £120m to retain its 30% stake in the business.
The £400m includes approximately £40m in separation costs to split the bank from the group.
The extra costs will eat into its capital used to set against loans. The ratio was expected to be at up to 9% but would plunge to 7.2% without action.
The bank revealed its annual report and accounts will be published on or before April 8.
However, it said they would show branch numbers have been cut by 9% – with a target of a 15% closure rate – and staff numbers were slashed by 1,000 last year.
The problems at the bank, exposed when it attempted to buy 632 branches from Lloyds Banking Group, have caused major problems for the wider Co-operative group, which culminated in new boss Euan Sutherland quitting.
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