Five questions answered on the Co-op Group’s banking losses

The Co-operative Group announced today heavy financial losses due to problems with its banking division. We answer five questions on the Co-op’s current financial woes.

What losses have the Group recorded?

The Group lost £559m in the first half of 2013, after writing off £496m in bad loans at The Co-op Bank.

These bad loans are mostly related to Britannia Building Society, which merged with the Co-op in 2009.

What other financial troubles does the Group face?

Including the write-downs, Co-op Bank alone reported a total loss of £709m.

It also faces a £1.5bn capital hole in its balance sheet. Regulators say it must fill the gap.

Were these losses anticipated?

Yes. Co-op Group chief executive, Euan Sutherland, who took over the role in May this year, said the Group faced "well-documented challenges”.

He added: "My first few months in the role have been focused on putting in place the recovery plan for the bank," he said, but warned there were "no quick fixes".

Niall Booker, the Co-op Bank's chief executive added: "The underlying issues in the results today are not new.”

How does the Co-op Bank plan to plug the £1.5bn capital hole?

In June this year the bank announced it had struck an agreement with the Prudential Regulation Authority, the bank regulator, to plug the hole, which includes plans for a stock market listing, measures to raise money from bondholders and the sale of its insurance business, planned for 2014.

What are the Co-op Bank’s future plans?

According to Booker:

 "We are now clearly focused on improving the capital position of the Bank... [and] at the same time, we have continued to lend, maintaining our focus on supporting our loyal customers, both in retail and through our continued focus on lending to small and medium-sized businesses."

The Co-operative Group announced today heavy financial losses. Photograph: Getty Images

Heidi Vella is a features writer for Nridigital.com

Photo: Getty
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Who will win the Copeland by-election?

Labour face a tricky task in holding onto the seat. 

What’s the Copeland by-election about? That’s the question that will decide who wins it.

The Conservatives want it to be about the nuclear industry, which is the seat’s biggest employer, and Jeremy Corbyn’s long history of opposition to nuclear power.

Labour want it to be about the difficulties of the NHS in Cumbria in general and the future of West Cumberland Hospital in particular.

Who’s winning? Neither party is confident of victory but both sides think it will be close. That Theresa May has visited is a sign of the confidence in Conservative headquarters that, win or lose, Labour will not increase its majority from the six-point lead it held over the Conservatives in May 2015. (It’s always more instructive to talk about vote share rather than raw numbers, in by-elections in particular.)

But her visit may have been counterproductive. Yes, she is the most popular politician in Britain according to all the polls, but in visiting she has added fuel to the fire of Labour’s message that the Conservatives are keeping an anxious eye on the outcome.

Labour strategists feared that “the oxygen” would come out of the campaign if May used her visit to offer a guarantee about West Cumberland Hospital. Instead, she refused to answer, merely hyping up the issue further.

The party is nervous that opposition to Corbyn is going to supress turnout among their voters, but on the Conservative side, there is considerable irritation that May’s visit has made their task harder, too.

Voters know the difference between a by-election and a general election and my hunch is that people will get they can have a free hit on the health question without risking the future of the nuclear factory. That Corbyn has U-Turned on nuclear power only helps.

I said last week that if I knew what the local paper would look like between now and then I would be able to call the outcome. Today the West Cumbria News & Star leads with Downing Street’s refusal to answer questions about West Cumberland Hospital. All the signs favour Labour. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.