Co-op Bank hands out £90m dividend to investors as it prepares for mutual ownership

Co-operative Bank has prepared a £90m dividend payout for investors ahead of its imminent return to mutual ownership.

The lender, which is due to merge with Coventry Building Society early next year in a £780m deal, told investors on Tuesday that trading conditions had been “solid” in the third quarter.

Co-op highlighted a rebound in customer deposits and wholesale market activity, with the bank boasting a “significant surplus for all capital and liquidity requirements”.

Boss Nick Slape said Co-Op was focused on delivering value to shareholders, who “have patiently supported the bank in its recovery”.

In March, the cooperative announced plans to cut 400 jobs as it seeks to “simplify and transform the business.”

The Co-op board has recommended a dividend just shy of 1p per class A ordinary share for the year to December 31, well ahead of the 2023 annual dividend of 0.13p and a return of £90 million pounds sterling to investors in total.

Slape said net mortgage balances have risen 2 per cent this year, while net lending to SME businesses has soared 16 per cent.

Meanwhile, total customer deposits are up 1 per cent and Co-Op has seen around 70 per cent fewer current account changes.

The bank has also performed well in the wholesale market with a new issue of three-year secured bonds worth £500 million and the successful early refinancing of £200 million of other liabilities, “both attracting very strong demand from investors “, according to Slape.

He added: ‘We have focused on delivering value for shareholders.

“Our shareholders have patiently supported the bank in its recovery and, following continued profitability and the successful normalization of capital requirements, I am delighted that the board has been able to declare a value-returning interim dividend ahead of the planned completion of the sale of the bank. bank to Coventry Building Society in the first quarter of 2025.

“The bank is in a strong position, maintaining a resilient, low-risk balance sheet and sustained credit quality.”