Press
Co-operative Bank results 'point the way forward'
By Joy Dunbar
Financial Adviser, Thursday, Mar 26, 2009
The Co-operative Bank has reported a rise in income, lower costs and lower bad debt charges for the second half of last year, compared with the same period in 2007.
Despite investment writedowns in its wholesale business, the bank said its full-year results are expected to be favourable, despite the difficult market conditions.
The bank also announced it would be required to contribute an additional levy to the Financial Services Compensation Scheme, expected to be £10.5m.
The Co-operative Bank anticipates board changes in the future as a result of the merger with Britannia, which is subject to both shareholder approval and the FSA giving the deal the go-ahead.
Co-operative Financial Services, the parent company, revealed it moved £120m of capital into the Co-operative Bank as ordinary share capital in early 2009.
A transfer statement posted to members of Britannia Building Society about the proposed merger said: "Higher interest income from balance sheet growth and improved wholesale margins, arising from investment of the Co-operative Bank's growing deposit base, has been offset by lower retail margins.
"The Co-operative Bank has reduced its exposure to unsecured lending and offered market leading deposit and term products to further strengthen the balance sheet. This was able to support strong but measured growth achieved in secured mortgage and corporate lending."
James Carter, principal of London-based IFA Independent James, said the Co-operative Bank had always stood out as a bastion of high standards.
He said: "The building society and cooperative model should be adopted on the high street. I agree with some politicians who said the building society and mutual sector should expand because they did not cause any troubles in the current economic crisis.
"The few building societies that found themselves into trouble financially dabbled in buy-to-let and other kinds of lending."