Co-operative Bank recovery gains traction in Q3

Co-operative Bank has made headway in Q3 2015, in its bid to regain the market’s confidence.

The beleaguered bank was positive about the rebuilding of its core business on Thursday, with mortgage origination recovering to “required levels”.

Mortgage completion for the nine months to 30 September totalled £1.81bn, while redemptions reached £1.76bn.

The bank blamed this on a number of maturing fixed-rate customers remortgaging to other lenders.

Co-operative Bank also warned its asset spread was still facing pressure, though it remained comfortable its program to reduce the cost of funding was offsetting this.

The bank also confirmed another securitisation of its non-core Optimum portfolio, totalling £1.65bn.

“The second securitisation of part of the Optimum portfolio was another key milestone in building capital resilience and we have met our capital commitment for 2015”, CEO Niall Booker said.

Planned efficiency savings through outsourcing, ATM network rationalisation and improved management of third party costs have also performed better than expected.

The bank agreed with the Prudential Regulation Authority that it is not required to issue further subordinated debt this year.

It will recommence its issuance program in 2016 to meet the requirements of the upcoming MREL regime.

Co-operative Bank also indicated a potential windfall from the sale of Visa Europe to Visa Inc.

As a shareholder, the bank expected to receive of €56m cash, €35m Series B preferred stock in Visa Inc. and contingent earn-out consideration from the sale, which should be completed in 2016.

Overall, Booker was pleased with the progress made this year.

“Encouragingly, the performance of the core bank continues to improve as we become a more competitive provider in the marketplace.

“Notwithstanding the progress noted above, the bank remains exposed to external macroeconomic conditions and there is still considerable work ahead to fully implement the turnaround plan”, Booker warned.

The bank previously indicated its unlikelihood to make a profit before 2017, and had shelved its 2013 plans to list.