Co-operative Bank slides to £709m first-half loss The Co-operative Bank made a pre-tax loss of £709m in the first half of the year as it wrote off £496m in bad loans and investments, delaying further its return to financial strength. The bank said its tier one capital ratio, a measure of financial strength, would not hit the 9 per cent it had expected by the end of the year but would surpass the 7 per cent minimum. The news comes despite measures to fill a £1.5bn capital hole identified by the financial regulator this year. It plans a debt exchange with bondholders that would pump in £1bn of fresh capital, with £500m from asset sales next year. The parent Co-operative Group made a £559m pre-tax loss in the 26 weeks to July 6, compared with an £18m profit the year before. The banking group's losses grew from £57m to £709m. Its larger supermarkets division saw profits reduced slightly from £119m to £117m on revenue that dropped 0.4 per cent to £3.6bn. Like-for-like sales were down 1.1 per cent. Steve Murrells, chief executive of food, said it was losing market share to all its rivals and had "a lot of hard work to put in," particularly to reduce prices. The mutual's revenue fell from £5.83bn to £5.77bn. Net debt fell from £1.5bn to £1.2bn as it sold its new head office in Manchester and leased it back. The bank write-offs relate to commercial property loans and subprime residential mortgages that the Co-op inherited when it merged with the Britannia building society in 2009. The loans have been hived off into a non-core division that accounts for £15bn of the bank's £32bn assets. The Co-op sold or repaid £700m in the first half as it runs the book down. Of this year's £496m, £372m came from further reassessment of the portfolio book and £124m from customers experiencing fresh difficulties. Neil Booker, the bank's chief executive, said historic writedowns were now complete. He said the bank would reduce its size, creating a further £148m writedown on its IT system. It had to make customer redress provisions of £61m, which includes a further provision of £25.0m for PPI and £26m for mis-sold credit card protection policies. As rating agencies cut the bank's credit rating, wholesale depositors had withdrawn almost all their funds but retail customers had remained "remarkably loyal," Mr Booker said. Euan Sutherland, who took over as the mutual's chief executive in May, said the group had embarked on a four-year turnround strategy and was "committed" to the bank. He defended the recapitalisation plan as a "crucial first step" to returning the bank to health, saying: "I would not be putting that [£1bn] in unless we thought there was a future for the bank. It has an important part to play in the banking sector. "The brand has taken a knock," he admitted but added: "We remain convinced of the considerable potential to be realised across the group and are confident that we are well placed to restore the Co-operative brand to its rightful place."