Co-op Group may re-enter financial services once bank sold
However, Co-op Group CEO Steve Murrells admitted that given the current phrasing of the articles of association it would not be possible.
In its annual accounts published today, Co-op Group announced it had written down the value of its minority shareholding within the Co-op Bank from £185m last year to £0.
It said this was the result of “volatility caused by the ongoing sales process at the Bank”.
Co-op Group holds a 20% stake in Co-op Bank, but Murrells said whether it would retain any interest in the bank once it was sold is still to be determined.
“As a minority shareholder it’s out of our hands,” he added.
Speaking on the Today programme, Murrells said: “It’s a number of years since we owned the bank. The history is well known of the difficulty it got itself into and we chose to take the decision back then to save the bank, do the right thing based on our past and our beliefs but put it in to the hands of other shareholders.”
When asked if the previous sale now prevented Co-op from re-entering financial services, Murrells added: “As the articles are written today, no we can’t.”
However, he did not rule out any possible future moves.
The write-down pushed the Co-op Group into a pre-tax loss of £132m in 2016, down from a £23m profit in 2015.
Relying on mortgages
The Bank’s latest results in March showed it was relying on performance in its mortgage division to help turn around its fortunes, after confirming it was up for sale in February this year. It posted a statutory loss before taxation of £477.1m for 2016, against £610.6m in 2015.
Co-op Bank praised its “award-winning” intermediary channel Platform, which accounted for 91% of completions. The retail mortgage book grew by 5% to £14.1bn from £13.4bn in 2015, representing a 1.1% market share with £3.1bn of gross lending last year and is targeting annual increases of £1bn through its broker mortgage lender.