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Co-op Bank narrows half-year losses even as customers flee struggling lender

Published: 11:34 10 Aug 2017 BST

 Co-op Bank
Co-op Bank has agreed a £700mln rescue package with its hedge fund owners

The Co-operative Bank plc (LON:CPBB) narrowed its first-half losses even as it lost about 25,000 current accounts as customers fled due to the uncertainty over the troubled lender’s future.

The bank, which in June agreed a £700mln rescue package with its hedge fund owners to save it from collapse, saw losses in the six months to 30 June fall to £135mln from £177mln last year.

The Co-op Bank put itself up for sale earlier this year but ditched the plan after its existing investors agreed to a rescue deal that will see them swap their debt for a stake in the bank.

READ: Co-op Bank lives to fight another day as it agrees £700mln rescue deal

Its parent company’s stake will fall from 20% to about 1%. 

The bank said the deal was "on track" to be completed by September. 

“This will secure the future of The Co-operative Bank as a viable stand-alone entity with greater capital strength enabling a new phase in its turnaround,” said chief executive Liam Coleman.

"Against this backdrop, business performance in the first half of 2017 has been resilient. Customer satisfaction for the service we provide has increased and we have continued to reduce our cost base. Customer relationships are hugely important to us and the vast majority of customers have remained very loyal as we have progressed the sale and capital raise process and I am extremely grateful for their ongoing support.”

The narrowed losses were supported by a 9.9% decrease in operating costs, offsetting a 2% decline in current accounts to 1.4 million.

The common equity tier one ratio – a measure of its capital position – fell to 9.8% from 11% in December as a result of the first half loss.

Coleman said: "Of course there is more hard work ahead, and like other banks, we recognise there are risks to the UK economy, but this is a great bank and we are positive about the future.”

Last week the group said it will cancel its listing of bonds in London on September 1 as part of its plans for an equity capital raising and recapitalisation. Bondholders can apply for cash compensation before their investments are cancelled.

READ: Co-op Bank to cancel listing of bonds as part of restructuring plan

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