The Co-op Bank, part of The Co-operative Group, has reported a net loss of £673.7m ($1.2bn) for fiscal 2012 on the back of corporate impairment charges and further PPI provisions.

Following the announcement the lender has said it remains committed to buying 632 branches from Lloyds( codenamed Verde), a deal it signed up to in 2012.

Despite the banks poor results the deal may survive thanks to the sale of The Co-op’s life insurance and asset management businesses to Royal London Mutual Insurance Society for $219m.

The Co-op Bank has had to commit £149.7m to PPI provisions in 2012, an increase of £59.7m from 2011.

The Co-op has also reported a rise in costs as a result of the termination of its contract with tech provider Infosys.

The Co-op’s cost-income ratio rose to 73.7%, an increase of 7.5 percentage points from 2011.

The retail banking unit posted a gross profit for 2012 of £50.1m, down 46% year-on-year.

The company’s loan to deposit ratio remained strong at 92%, a fall of 2 percentage points from 2011.

Barry Tootell, CEO of Co-op Bank, said: "These results are disappointing, but are framed by the outcome of a recent strategic review designed to build on the strength of the Bank’s core retail and business operations and at the same time increase our focus on de-risking the non-core assets in order to further strengthen the balance sheet."

In October 2012 the Co-op Bank overhauled its staff bonus system, aiming to reward staff for customer service instead of sales figures.


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