The bank said it expected to keep losing money in 2016 and 2017, and that the financial regulator had agreed that it can postpone some of its plan to repair the balance sheet, reports The Telegraph.
The Co-op Bank made a loss of £610.6m before tax for the year ending December 31, compared to a loss of £264m the year before.
However, losses in its “core bank” narrowed from £78.6m to £14.9m, and the number of current account customers began to stabilise at nearly 1.6m, compared to a 4pc drop in 2014. Co-op Bank aims to have this business in the black by the end of 2017.
The bank has also more than doubled the number of mortgage completions and said it had mostly finished its programme of branch closures, after shutting 54 earlier this year.
Customers began deserting The Co-op Bank after a torrid 2013 in which it revealed a £1.5bn hole in its finances. After the bank was taken over by its hedge fund lenders, the Co-operative Group was left owning just 20pc of the firm.
In January, two of the Co-op Bank’s bosses were banned from taking senior City jobs for life after presiding over the group’s near-collapse.
Three years into a turnaround plan led by chief executive Niall Booker, the job of repairing the business is still hampered by legacy costs, including an additional £71.8m booked for PPI compensation for 2015, and nearly £99m for Consumer Credit Act redress and forgone interest charges.
Mr Booker said the losses “shouldn’t distract from considerable progress in the bank and have no impact on the core bank, which delivered an almost break-even result”.
He declined to confirm reports that the Co-op Bank has started to line up his replacement, but said that the business was moving towards a new stage in its recovery. “It’s a triage phase, and some people’s skills are really suited to that. As we move into long-term care, some people are really suited to that…. You don’t get trauma surgeons who treat you for ever.”
Co-op Bank continues to consider a sale on the stock market, but “we still have a fair bit of work to do to get the bank into good shape for an IPO”, Mr Booker said.
Staff numbers have fallen by more than 1,000 full-time posts to 4,470 in the past year, helping to slash operating costs by 13pc to £492m.
During the year, the bank shrank its customer assets from £10.3bn to £4.9bn, while booking a loss of £121.4m on the disposals.
It also securitised £3.1bn-worth of mortgages, although the bank has put the brakes on any future deleveraging in its Optimum mortgage book or any other debt issuance. The Prudential Regulation Authority has approved its plan, which will delay the bank’s compliance with certain capital buffer rules until 2020.