Co-op Bank Discovers New £400m Shortfall

The struggling Co-operative Bank has discovered a new £400m capital shortfall - in addition to its previous £1.5bn funding gap.

It now expects to report a full-year pre-tax loss next month of some £1.25bn.

The bank added that job cuts hit the 1,000 level last year, or 14% of the workforce.

The bank said that in 2013 it was hit with an estimated £400m in legacy payment protection insurance (PPI), interest rate swaps and other consumer credit mis-selling claims.

Last summer the bank, which has promoted itself as ethically-minded, revealed it had discovered a £1.5bn capital hole.

The latest reassessment increases that figure by around a quarter and is expected to be met by funds provided by its bondholders.

Its five-year recovery plan announced in 2013, which included raising funds from its shareholders, is now to be "reset".

Chief executive Niall Booker said: "The proposed capital raise would enable us to reset this starting point and continue with the execution of our original business plan.

"As a result of this continuing review, we are unearthing a range of issues which the new executive team is having to address."

In February, the parent Co-operative Group announced an online poll to get feedback from the public after admitting it had lost its way.

It was hit by the huge capital black hole and a scandal involving the bank's ex-chairman Paul Flowers.

The Co-op Group will release its annual results on April 17 and the bank's figures will be announced on April 8.

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