THE CO-OP GROUP has made a £132million loss after writing off its bank business.
It reduced the value of its 20 per cent stake in the CO-OPERATIVE BANK from £185million to zero.
The loss, the group’s first since 2013, is a sharp drop from its £23million profit last year.
Co-Op Bank put itself up for sale in February. A spokesman told The Sun that plans to sell the stake in the bank had made it difficult to value it.
As a result, the group had decided it would be “prudent” to value it at zero in its accounts.
The Co-op also confirmed that it is “supportive of the sale process” and “hopes it will achieve a sale”.
Possible buyers have until the middle of the month to express an interest.
An announcement on the bank’s future is expected in the next few days.
The bank’s woes date back to its disastrous takeover of the Britannia Building Society in 2009.
Poor quality loans at the building society pushed the bank to a huge loss in 2012.
The fallout from the write-downs left the bank unable to complete on a deal to buy more than 600 branches from Lloyds Bank.
Then in 2013 the bank almost collapsed after the discovery of a £1.5billion black hole in its finances.
A group of US investors rescued it and Co-operative Group kept a 20 per cent stake in the bank as part of the deal.
But in the same year the bank was also hit by scandal when its chairman, former Methodist minister
Paul Flowers, was forced to step down from the £132,000-a-year job.He was filmed buying cocaine, ketamine and crystal meth for drug-fuelled orgies.
The shamed preacher, dubbed the crystal Methodist, admitted possession of drugs and was defrocked by the church in January this year.
Despite its woes, the troubled bank has remained a hit with its four million customers.
A two step plan to fix woes
IN February the Co-op Bank announced a two-part strategy in a bid to fix its woes.
It said it was looking for a new buyer.
And it said it would consider a debt-for-equity swap to raise cash.
A progress report is expected this month.
What happens if the bank fails to find a buyer and is unable to raise more capital is highly theoretical.
But one option could be to transfer customer accounts to other providers in order to maintain a service for them.
Customer deposits up to £85,000 are covered by the Financial Services Compensation Scheme.