The Co-operative Bank's losses more than doubled to £610 million last year and there's more trouble ahead

The Co-operative is still struggling to recover from the £1.5 billion balance sheet “black hole” that was discovered in 2013 and almost sank the bank.

Losses in 2015 ballooned to £610.6 million, according to the bank’s annual report, from £264 million in the prior year. The jump in losses is due to: a reduction of interest income; losses on asset sales of £121.4 million; a jump in conduct and legal costs of £92.5 million to £193.7 million; and restructure costs of £224.2 million.

Co-op Bank almost went to the wall in 2013 and 2014 after a £1.5 billion “black hole” was discovered in its balance sheet from losses on real estate loans. A scandal involving alleged drug taking by the bank’s former chairman uncovered in late 2013 only worsened the situation. 60,000 customers left the bank in 2014, according to the Financial Times.

Bondholders eventually took control of the group, pushing the Co-operative Group, the bank’s longtime owner, to become a minority shareholder. The bank has been trying to repair its balance sheet ever since by selling off all “non-core” businesses and just focusing on retail banking and SME (small and medium enterprise) services.

While progress has been made, chairman Dennis Holt says in the annual report that the Co-op Bank is set for a pre-tax loss both this year and next. He adds that “we continue to feel the impact of macroeconomic headwinds and some of the legacy conduct issues which, in common with the rest of the industry, are taking longer to work through than originally anticipated.”

But Holt says in the annual report:

However, we expect both the level of investment and the impact of historic issues to materially reduce in subsequent years and it is becoming evident that there is a viable Core Bank with a solid franchise emerging which we expect to return to operating profitability before the end of 2017.

CEO Niall Brooker’s pay package totalled £3.8 million last year, up from £3.08 million in 2014. CFO John Baines’ total take home rose from £390,000 in 2014 to £932,000.

The Co-operative Bank has 4 million retail customers and 100,000 SME customers.

NOW WATCH: James Altucher makes an argument for not paying back your credit card debt

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.