Co-op Bank up for sale after years of IT problems

Co-op Bank has announced that it has put itself up for sale, inviting bids from any comers wanting to buy up the beleaguered firm.

Having almost collapsed in 2013, the bank, part-owned by the Co-operative Group, failed to find its feet and strengthen its finances due to low interest rates. Among the potential buyers is TSB, which told the BBC that once it has separated its IT systems from Lloyds it could snap up Co-op Bank if the price is right.

A spokesperson for the Bank of England’s Prudential Regulation Authority says it welcomes the action. “We will continue to assess the bank’s progress in building greater financial resilience over the coming months,” it adds.

Co-op Bank merged with Britannia in 2009, creating a £1.5 billion “black hole” in its accounts by 2013. Charmain Paul Flowers resigned over expenses scandals and was then convicted for drug possession the following year. Two former Co-op Bank executives – Barry Tootell and Keith Alderson – have been banned from holding senior banking positions by the Bank of England.

In 2015 IBS Intelligence reported on the endemic IT problems at Co-op Bank, which had been labelled as “unsuitable” and “inherently fragile”. According to the bank, many of its business, operational, reporting and financial processes need regular manual intervention, increasing the risk of errors in data.

An independent review carried out by Sir Christopher Kelly in April 2014 criticised the bank’s IT renovation. In a scathing 13-page report, Kelly cited (rather prophetically) an underestimation of the amount of work needed, a lack of working relationships between key figures and the
scale of the concerns people were raising about the project as major worries for the future.

Dennis Holt, Chairman at Co-op Bank, says: “While our plan has been impacted by lower for longer interest rates, the costs associated with the sheer scale of the transformation and the legacy issues we faced in 2013, there is considerable potential to build the bank’s retail franchise further using the strength of the brand, its reputation for strong customer service and distinctive ethical position.”

See more: Independent review slams disastrous IT project at Co-op Bank

Also: Co-operative struggling to fix endemic IT problems as losses treble in 2015

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