Hold tight: the Co-op Bank has published its annual results and, as literally everyone predicted, it’s pretty bad.
The headline figure is that the bank made a £1.3bn loss for 2013 (mercifully in line with expectations), and that it doesn’t expect to make a profit ‘this year or next’. Under the circumstances, even the implication that it might in 2016 seems optimistic. Although, as Joshua Raymond, chief market strategist at Cityindex, pointed out: 'The one real positive from the earnings is perhaps the fact there is no big negative surprise. Market expectations were severely low and this was met.'
Expect some debate, as well, over tthe salary and bonus package of chief executive Niall Booker. It's complex stuff: in the last seven months of 213, he received £1.7m in base salary, benefits and something called 'turnaround allowance'. This year, he gets £1.2m base salary, and 'further allowance' of £1.7m, which is contingent on the bank maintaining its capital position. Complicated, but still a lot.
To be fair, Booker has the most difficult job in banking - but at a time like this, it’s not exactly great for the bank’s image. It did confirm it had cut payouts to executives who have quit by £5m, though.
The results come after two delays (one just after Co-op Group chief exec Euan Sutherland stepped down, one on Monday, to ‘finalise its accounts’), and include not only the £1.5bn hole in its finances that was discovered - and partly filled by hedge funds - last year, but another £400m in PPI costs it noticed in March. The rights issue that followed caused analysts to speculate that the 30% of the bank still owned by the Co-op Group would be diluted.
On the face of it, a £1.3bn loss looks bad - but actually, if you compare it to the string of other disasters the Co-operative Group, and in particular its bank, have faced, it’s not good news, but it’s not as bad as it could have been, either.
Yesterday’s departure of Lord Myners, the man installed by the Co-op Group to think of ways to save it, will have shaken the bank’s new hedge fund overlords. But they must see something in it: after all, a hedge fund will only stick around while it sees potential to make money.
So these results suggest the group’s banking arm is about to go one of two ways: it’s either on its way to recovery, or on its way to becoming just another high street lender. Either way, the Co-operative Bank as we know it will undergo massive changes over the next few months.