The Co-operative Group announced on Thursday that it had made pre-tax losses of £559m in the first six months of 2013, amid troubles within its banking division.
In its publication of its interim results, the group announced that its banking arm made an overall loss of £709m, which effectively wiped out profits of £150m from businesses it owned.
Speaking about the figures, Co-op Group CEO Euan Sutherland said, “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, which was agreed with the Prudential Regulation Authority (PRA), the banking regulator.”
He added, “We will build on that plan with a wider transformation of the group as a whole. My team and I have embarked on a strategic review that will lay the foundations for that. This will be a major transformation that will rely on the continued support of our customers, members and colleagues.”
In June, the bank announced a ‘bail in’ plan, a process where bonds are turned into shares and floated on the stock market, in order to fill the £1.5 billion shortfall in the Co-op’s balance sheet.
This led to some questioning whether the group could continue as a co-operative, but Ed Mayo, secretary-general of trade body Co-operatives UK said that the group “remains on a firm footing”.
The Co-operative Group also reaffirmed its ethical agenda in May, insisting that there was “no change to our ethos or the way we run our bank”.
The Bank of England responded to Thursday’s figures, saying that the PRA would “hold the Co-operative Bank to its plans, and if they fall short of what is required, it will ask for additional action.”