Co-op writes off £148 million in IT costs as losses widen
29 August 2013 | 7683 views | 0
The UK's Co-operative Bank has written off a further £148 million in IT costs as it ditches plans to implement a new core banking platform from Infosys.
The technology woes were cataloged in the troubled bank's half-year results announcement in which it revealed escalating losses of £709 million due to loan impairment charges, customer mis-selling provisions and the IT write-down.
As part of an effort to fill a £1.5 billion capital shortfall identified by regulators earlier this year, the Co-operative Group has accelerated plans to split the business into an asset management unit carrying the bulk of the bank's bad loan losses and the core bank, which will continue to concentrate on supporting retail banking and smaller business customers.
In a conciliatory statement announcing the results, Niall Booker, chief executive officer, says: "Work is continuing to finalise the exact details of the shape and structure of the core bank, the systems underpinning it, the product range and target customer base as well as the cost take out required to return the business to profitability."
The full extent of the Co-op Bank's problems emerged following its ill-judged take-over of the Britannia Building Society in 2009 and the collapse of a deal buy 630 Lloyds branches back in April.
Under the new business plan, the Co-op will have to ditch a planned migration to Infosys's Finacle banking platform, which was signed off in 2009 but has yet to take place. The bank has already spent hundreds of millions of pounds on the switch to Finacle since buying the Britannia Building Society.
News of the write-off was carried in a blunt statement in the interim results announcement: "The directors have concluded that the IT assets previously under creation to replace the core banking platform will no longer be implemented as they are inconsistent with the bank's strategy going forward, resulting in a write down of £148.4m."