The Co-op Bank made a pre-tax loss of £709m in the first half of the year as it was forced to take a £496m impairment charge against new writedowns on its toxic assets.
The mutual society is currently attempting to raise £1.5bn to recapitalise its lending business and said the losses were already factored into its fundraising plans, reports The Telegraph.
The bank said the writedowns came largely as a result of reassessing the bank’s assets, as well as the transfer of more loans from the ‘core’ part of its business to the ‘non-core’ division.
In addition to the loan losses, the Co-op Bank also called time on the project to build a new IT system that has already cost the lender several hundred million pounds.
In a statement on Thursday, the bank said it would take a further £148m against the system and said the development had ceased as it was “inconsistent” with its strategy.
Co-op Bank also admitted for the first time that it faced a financial liability over the mis-sale of interest rate hedging products to small business, taking a £10m charge for the first half.
The bank also took a further £25m provision against the mis-sale of PPI and a £26m charge against the mis-sale of card and identify-theft products.
