LONDON (Reuters) - Britain’s Co-operative Bank said on Thursday its $900 million (693 million pounds) rescue by investors was on track to conclude by September and would allow it to grow again, as its first-half losses narrowed to 135 million pounds.
The restructuring and recapitalisation plan agreed in June with U.S. hedge fund creditors would provide much greater capital strength, with its core capital ratio expected to rise to between 22 and 23 percent by the end of the year, from 9.8 percent at the end of June, the British bank said.
“We believe the recapitalisation will enable the bank to move forward with confidence.. We will be investing in the brand and renewing marketing efforts,” the bank’s Chief Executive Liam Coleman told reporters on a call following the results.
Co-op Bank, which provides banking services to almost 4 million retail and small and medium-sized enterprises, put itself up for sale in February after its capital base dipped to levels unacceptable to Britain’s financial regulators as it grappled with restructuring costs and weak income.
The rescue deal, which will see its main investors swap their bondholdings for shares, came after months of negotiations with creditors including BlueMountain Capital, Cyrus Capital Partners, GoldenTree Asset Management, and Silver Point Capital and put an end to the sale process.
The bank said it had no plans to sell itself in the future.
Overall losses before tax narrowed by 24 percent to 135 million pounds from 177 million in the first half of 2016, hit by a combination of the restructuring programme, low interest rates and competition in the British mortgage market.
The bank also lost around 25,000 net current account holders in the first half of the year or 2 percent of its 1.4 million customers, but hoped the worst was behind it.
“In the first 3 months of year, that flow was at a higher level and as we moved through May and June subsided and moderated significantly across that period,” said Coleman.
“In terms of a relative number, we will be looking in the second half and 2018 and 2019 with our new and revised current account and switching offer to be growing market share.”
The bank did not rule out further headcount reductions especially in areas such as temporary staff and contractors, having cut permanent staff by 897 to 3,313 in the past year.
Reporting by Anjuli Davies and Lawrence White; editing by Rachel Armstrong and Alexander Smith