A £60 million PPI hit has dragged the Co-operative Bank deeper into the red with a £118.6 million loss for the three months to September this year.
The bank had previously announced it might have to add between £55 million and £75 million because of the flood of claims being received before the August 29th PPI claims deadline.
Releasing its third quarter trading update, the Co-op said it had received 15% of its total number of complaints in the final week leading up to the deadline.
It said the volume of claims meant getting final decisions on all those received will take well into 2020.
The bank, which has 3.5 million retail customers, 85,000 small businesses and a ‘significant’ number of charity accounts, expects the final cost of PPI compensation will only be known when it announces its trading figures for the first half of the year in the summer.
It is still restructuring after almost going out of business in 2013 when a plan to buy the newly created TSB branches from Lloyds had to be shelved after a £1.5 billion hole was found in the bank’s balance sheet.
Facing collapse, it was bailed out by a group of American hedge funds who were already investors in the bank.
The move left Co-op Group with a 20% stake in the business which it held until early 2017 when further financial problems led it to put itself up for sale or risk going into special measures with the Prudential Regulation Authority (PRA).
The hedge funds came to the rescue again and provided the £700 million the bank needed to solve its problem, but the group’s stake was reduced to just 1% of shares.
That last 1% – valued at £5 million – was sold later in the year, ending the Co-operative Society’s 145 year link though the bank has continued to trade under the same name.
The PPI announcement made the Co-op the latest of a range of banks and other firms to admit that the massive surge of claims before the deadline had forced them to add more than £4.8 billion to their PPI payment pots once the deadline had passed
Top of the list was the massive £1.8 billion earmarked by Lloyds Banking Group (LBG) with the lowest being Tesco Bank at £45 million The full list is:
- LBG £1.8 billion
- Barclays £1.4 billion
- Royal Bank Of Scotland (RBS) £900 million
- HSBC £302 million
- Shop Direct £241 million
- Santander £99 million
- Co-op Bank £60 million
- Tesco Bank £45 million