COMMENTS made yesterday by directors of Co-operative Bank to explain their decision to put the lender up for sale underline how the firm continues to pay the price of mistakes made in the past.
The board said the sale of the firm had always been a potential outcome of the turnaround plan for the bank. This was initiated following the bail out of the bank by US hedge funds in 2013 after a rapid expansion programme went wrong.
However, the board also noted Co-operative Bank expects to record another year of hefty losses when it posts results for 2016.
These look set to show the cost of sorting out past problems is still weighing heavily on the firm.
To make matters worse, the bank operates in a sector in which even the fittest players are facing huge challenges. Regulators have required banks to hold more capital. Record low interest rates have put pressure on lending margins for years. Firms need to make massive investment in IT systems to keep pace with market changes.
Some may doubt that Co-operative Bank will find a buyer for the group. Others may fear what a sale might mean for what the firm calls its ethically-led UK retail banking proposition.
But, it is worth bearing in mind that the Co-Operative Group has held only a minority stake in the bank since hedge funds put themselves in the driving seat in 2013.
There does not seem to have been a reduction in the bank’s determination to follow its distinctive approach.
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