The Co-operative Group posted a pre-tax loss of £132m for 2016 on Thursday, bruised by a £185m hit for writing down the value of its 20 per cent stake in the Co-operative Bank to nothing.
The results mean that the mutual has fallen into the red for the first time since 2013.
In a statement, it said that the markets in which it operates remain “fiercely competitive” and that it is still contesting with “challenging consumer and economic backdrop”.
It called its valuation of the Co-operative Bank “prudent” considering that it is in the middle of a sales process, the outcome of which is still uncertain.
Back in February, the Co-operative Bank was put up for sale after it said that that its capacity to organically meet longer-term UK bank regulatory capital requirements had become “constrained by the impact of interest rates that are lower than previously forecast […] and by higher than anticipated transformation and conduct remediation costs”.
In 2013, the bank narrowly avoided collapse after problematic real estate loans left a £1.5bn hole in its capital base.
Bondholders effectively took control of the bank at the time, while the Co-Operative Group became a minority shareholder.
In September last year the Co-Operative Group wrote down its valuation of its stake in the bank by £45m. In April, the bank had said that it would remain unprofitable for the next two years citing losses from asset sales and rock-bottom interest rates.
