Co-op Bank loses 38,000 customers after setback
London, August 23, 2014
Britain's Co-operative Bank said it lost around 38,000 customers in the first half of 2014, following its near collapse last year and a drugs scandal involving former chairman Paul Flowers.
Chief executive Niall Booker said he regarded the loss of any customer as a 'mortal wound', but argued the numbers leaving were not as bad as might have been expected, given the negative publicity that has hounded the bank.
'When you consider what the bank has gone through, I don't think it's a bad outcome. But I certainly don't want to appear, nor am I, complacent about it,' Booker said.
The customer loss was revealed yesterday after the bank reported a narrower loss for the first six months, after axing jobs and closing branches following a restructuring that led to its fall under the control of bondholders.
The bank was left fighting for its survival after a Â£1.5 billion ($2.5bn) capital shortfall was exposed in June last year following a failed bid to buy hundreds of branches from Lloyds Banking Group.
It was rescued when bondholders, including US hedge funds, agreed to a recapitalisation, which meant Co-op Group went from outright owner to holding just a 20 per cent stake.
The bank's problems were exacerbated when Flowers pleaded guilty to drug possession following a stream of lurid headlines in British tabloid newspapers.
The negative publicity likely resulted in some customers becoming disillusioned with the bank, which had built its reputation around ethical credentials such as not investing in weapons, tobacco and alcohol manufacturers.
Despite that, Co-op Bank said it had attracted nearly 10,000 new customers during the period, leaving it with a net loss of 28,199 current or checking account holders, equivalent to nearly two per cent of the total.
Britons are often reluctant to move between banks because of the perceived difficulties involved, although new rules that guarantee the paperwork will be completed within seven working days have lifted the number switching.
Co-op Bank also said its core Tier 1 capital ratio, a key measure of financial strength, stood at 11.5 per cent at the end of June and was expected to be significantly above the previous guidance of 10 per cent at the end of this year.-Reuters