The sorry story starts with the Co-operative’s banking arm, which reportedly spent its money on an IT system that could be scrapped. Sources told the Times that the cost of doing this could set the bank back by £200 million – almost the cost of its full year profits.
The company had taken on the Finacle IT platform upgrade project in 2009 as part of a £700 million integration programme linked to its partnership with the Britannia Building Society.
However, it has since had second thoughts about the system following a potential purchase deal of 632 branches from Lloyds Banking Group.
If the buy goes ahead, according to the Times, the Co-op will scrap the system and instead adopt the infrastructure currently used by Lloyds. This could land it with a huge hole in annual profits, which are set to be announced in mid-March. Last year’s earnings by the bank stood at £201 million.
A section of its retail arm is also struggling. According to the BBC, the company has announced that 338 jobs could be slashed in the Midlands after plans to close its Fashion and Home department stores.
The announcement comes after the group reported “substantial losses,” and “changing retail behaviour” at its department stores in Derby, Ilkeston and Chesterfield, in Derbyshire; Coalville and Wigston in Leicestershire; and Stafford.
However, the Group said it will try to turn some of these stores into different entities, which could help keep job losses to a minimum.