The Co-operative bank has increased its provision by a further £105 million to compensate customers who were mis-sold payment protection insurance (PPI) and various other products. The provision will cover ‘’future costs for PPI redress, arrears charges and the processing of certain mortgage interest ‘first payments”’.
This matter arose as The Co-Operative Group this week lost control of its banking arm after a decision from investors rejected a plan to save the troubled firm. In June 2013, requirements from the Prudential Regulation Authority (PRA) said the bank needed to raise £1.5 billion to plug a capital shortfall.
Co-Op Group Chief Executive Euan Sutherland said on Monday he had reached an agreement in principle to save the bank. The member-owned group will now control 30% of the bank’s equity, less than the 75% proposed in the original rescue plan. Bond holders will now take 70% under plans to renovate the massive hole in their balance sheets.
Turmoil to the Group continued as their long-standing chairman Len Wardle announced today he will stand down in May next year once the bank’s capital restructuring is complete.
Mr Sutherland thanked Mr Wardle for his “leadership and commitment”, since he joined the Co-Op’s board in 1992.
Earlier this year the banking arm of the Co-Operative group reported a pre-tax loss of £709.4m.