The Co-op Bank is on track to achieve its first annual profit in a decade as it ponders a stock market float, possibly as soon as 2023.
The self-styled ethical lender raked in profits of £28.5million in the nine months to September – its third consecutive quarter in the black following a string of scandals and a drastic shake-up plan.
It is understood the bank is considering a float – nearly ten years after it was bailed out by a group of hedge funds following its near-collapse.
The Co-op Bank raked in profits of £28.5m in the nine months to September – its third consecutive quarter in the black following a string of scandals and a drastic shake-up plan
Sources close to the firm told the Mail that the bank could float as soon as 2023 under its current growth plans, but that it was also exploring a merger with a rival.
Earlier this month, it emerged that the Co-op Bank had approached TSB with a view to combining the two businesses, but was turned down.
Nick Slape, chief executive of the Co-op Bank, said that TSB’s Spanish parent company Sabadell had ‘made it very clear that now is not the right time’.
He added: ‘We respect that position and have left it like that. I’m patient, the board is patient and we’ve got plenty on our plate.’
He declined to comment on the plans for an initial public offering (IPO). But he said the lender was exploring opportunities to buy more businesses and portfolios of loans.
The Co-op Bank has been hamstrung by a series of scandals over the last decade.
In 2009 it completed an ill-advised merger with Britannia, and only now is the bank finally integrating the former building society’s business onto its technology system.
In 2013 the Co-op Bank discovered a £1.5billion hole in its balance sheet, and then-boss Barry Tootell later admitted accounting misconduct.
Its reputation was further tarnished when chairman Paul Flowers, a former church minister, resigned and pleaded guilty to possession of an array of Class A drugs, which earned him the nickname ‘the Crystal Methodist’.
Slape, who took the reins last year, became its sixth chief executive in a decade as successive bosses failed to make any lasting impression at the struggling lender.
But now the bank is on track to make its first full-year profit since its troubles began.
Slape has been selling parts of the lender and its loan book, which it does not consider ‘core’, as it focuses on serving small businesses and households.
So far this year, the Co-op Bank has lent out £2.2billion in mortgages as the pandemic prompted a boom in the housing market.
The lender, which was formerly part of the Co-operative Group, was rescued by its hedge fund lenders in 2017.
Those firms – who include private equity firms JC Flowers and Bain Capital, after they bought shares held by Blue Mountain – are understood to be keen to exit.
Last year Cerberus Capital Management – branded a ‘vulture fund’ by MPs – abandoned talks to buy the Co-op Bank.