Low rates blamed as Co-op Bank axes 200 jobs

Low rates blamed as Co-op Bank axes 200 jobs


The troubled Co-operative Bank has announced plans to axe 200 jobs, blaming the prolonged low interest rate environment.

It comes as the policy of low rates faces criticism and on the day that Bank of England independence has been called into question by former shadow chancellor Ed Balls.

The bank said a large number of those affected were in management and head office roles, primarily in Manchester and Stockport, which are being "simplified and streamlined".

The lender, which employs more than 4,000 people across the UK, has been struggling to recover since its near-collapse in 2013.

Workers were spoken to about the changes on Thursday.

The bank said it was carrying out the cuts "as it seeks to reduce operating costs given the impact of a prolonged lower for longer interest rate environment".

Low rates make it more difficult for lenders to make money on loans.

Rates were slashed to 0.5% by the Bank of England in 2009 and fell to a new record low of 0.25% in the summer as the Bank sought to cushion the economy from the effect of the Brexit vote.

Co-operative Bank deputy chief executive Liam Coleman said: "Decisions such as these are never easy, but these cost reductions are critical to progressing our turnaround and delivering a cost base which supports a sustainable core bank.

"We have made progress in turning the bank around since 2013 but have always been clear that the Bank's recovery is a difficult journey."

The bank has said before that it expects to remain loss-making this year and next.

Its announcement comes as Mr Balls called for the Bank of England and other central banks to "sacrifice some political independence" as power was "hugely concentrated" in their hands.

Prime Minister Theresa May has drawn attention to the harm done to savers by low rates.

Bank of England governor Mark Carney has sought to fight off interference, and earlier this week accused politicians who criticise central banks of a "massive blame deflection exercise" against central banks.



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