£662m loss for Co-op's bank arm
The Co-op's swoop for 632 Lloyds branches has been under further scrutiny after its banking division racked up losses of £662m.
The mutual said the banking arm's financial strength was "solid" and that it was taking steps to improve its capital position ahead of the planned deal with Lloyds, which must offload the branches to meet state-aid rules.
The Co-op blamed the big banking loss on loan impairments on non-core operations mainly relating to its 2009 acquisition of Britannia and £150m to cover payment protection mis-selling.
But its banking business saw profits fall to £120m, from £173m.
Group results, including its food arm and specialist operations in pharmacy and funeralcare, showed an 18% fall in operating profits to £431m. Including the banking hit, bottom-line losses were £599m.
The Co-op announced a deal this week to sell its life insurance and asset management arm to Royal London and confirmed yesterday it will sell its general insurance arm in a move that will unlock capital for its banking arm.