"2016 was a year of both progress and challenge for The Co-operative Bank, culminating in the Board’s decision announced on 13 February 2017 to commence a sale process"
Co-Operative Bank has reported a statutory loss before tax of £477.1m in 2016 as it "continued to be impacted by legacy issues".
The Bank cited continuing adverse impacts incluing a reduction in net interest income, costs associated with the Britannia Building Society merger and higher remediation and strategic project costs.
Net interest income decreased by £76.7m to £394.8m which the Bank says is as a result of lower non-core asset balances, new business asset spreads remaining under pressure due to strong competition in the mortgage market and to a lesser extent, the impact of the reduction in the Bank of England base rate.
However the 2016 result marks a reduction from the £610.6m loss before tax reported in 2015. In its full year results, Co-Op Bank said favourable impacts which helped reduce the loss included lower operating costs, lower losses on asset sales, and lower conduct charges which reduced by £168.8m to £24.9m.
Chairman Dennis Holt said: "2016 was a year of both progress and challenge for The Co-operative Bank, culminating in the Board’s decision announced on 13 February 2017 to commence a sale process and consider other options to build capital.
"The Board has only been able to consider these options as a result of the considerable progress that has been made in delivering the Bank’s turnaround plan over the last three years. The Bank is stronger in many areas than in 2013 and these options would simply not have been feasible before.
"A key factor has been the lower for longer interest rate environment which has affected the income and profitability profile of the Bank. In addition, the costs of transforming the Bank and fixing the legacy issues of the past, proved to be higher than we originally anticipated. These factors combined have constrained the Bank’s ability to build capital in the medium term, and contributed to the Board decision and announcement of 13 February 2017."