Co-op Bank loses 38,000 customers but slashes first-half losses

The Co-operative Bank has announced a loss of 38,000 current account customers amidst a “hurricane of negative publicity” following its near collapse, but has, however, recorded a financial strengthening in its first half.

The 5% drop in its customer base was announced this week, including a net outflow of 2% of its current account holders.

The blame is being placed on negative publicity after the bank faced increasing problems relating to its board of directors and business practices. The bank has since released an array of ethical reforms, with a particular emphasis placed upon its governance structure and members rights.

Niall Booker, chief executive of the bank, said, “When you consider what the bank has gone through I don’t think losing less than 2% [of current account customers] is a bad outcome.”

The loss of 38,000 current account holders was partially offset by an increase of 9,700 customers who switched to the Co-op Bank, which is double the number of new customers who joined six months earlier.

Booker joined soon after a £1.5 billion capital hole was discovered and has since enforced an array of cost cutting measures to gain control over the bank’s finances. The bank is now being restyled into a smaller retail and business lender, with numerous branch closures and one in five staff being made redundant.

“Transforming the organisation into a viable and profitable business which generates capital in the long term still requires significant change – both operationally and culturally,” Booker said.

Charlotte Webster, campaign manager for Move Your Money, said, “The exodus of 38,000 customers from the Co-op Bank reflects the appetite for good banking in Britain.

“Whilst it’s undoubtedly disappointing to see a bank with much potential suffering from mismanagement, it’s reassuring to see the market on the move and people shifting their money into better hands. There’s more demand than ever for ethical banking and, thankfully, a growing number of options.”

A recent report by the Co-op concluded that the bank’s decline was due to a “culture of mediocrity”, as well as a “willingness to accept poor performance”. The group’s merger with Britannia Building Society in 2009 was also to blame.

Photo source: sludgegulper via flickr 

Further Reading:

Co-operative Bank drafts in ethics chief

Co-op Group stake in bank further diluted as £400m fundraising begins

Kelly review tells Co-operatives Bank’s ‘sorry story’

Co-op board ‘manifestly dysfunctional’, says review by Lord Myners

Co-op members unanimous on group overhaul