LONDON - The Co-operative Bank said Friday that it would cancel 4.97 million pounds, or about $8.38 million, in bonuses for current and former executives and other employees as the British lender reported a £1.3 billion pretax annual loss.
The bank said the bonuses wouldn’t be paid as a result of a combination of claw backs of deferred compensation that had yet to be paid to former executives and performance benchmarks not being met.
The embattled lender was forced to seek a capital infusion from a group of bondholders last year to avoid a collapse after it discovered a £1.5 billion capital shortfall. Last month, the lender said it would have to bolster its balance sheet by another £400 million.
On Friday, Co-operative Bank warned that it did not expect to make a profit in 2014 or 2015 and said that it was focused on reshaping its business and shoring up its capital position.
“During 2013, the task for the new management was to keep the bank alive.†Niall Booker, the bank’s chief executive, said in a statement.
The capital raising “prevented the bank from going into resolution, preserving the bank for our customers and protecting jobs without cost to the taxpayer. However, there continue to be significant issues, which need to be resolved,†he said.
To avoid collapse last year, the bank agreed to a debt restructuring in which a 70 percent stake was relinquished to a group of bondholders, including the hedge funds Silver Point Capital and Aurelius Capital Management.
After the debt restructuring, Co-operative Group, its parent company, is the bank’s largest shareholder, with a 30 percent stake.
The Co-operative Group traces its roots to the Rochdale Society of Equitable Pioneers, a cooperative company formed in 1844 that paid a share of its profit back to its members as a dividend.
The group provides a range of products and services, including operating grocery stores, funeral homes, pharmacies, an insurance company, legal services providers and the banking unit.
The Co-operative Bank’s financial difficulties can be traced back to its acquisition of Britannia Building Society, a local rival, in 2009. The merger left the bank with a large pool of delinquent commercial real estate loans.
A deal to buy part of the Lloyds Banking Group’s branch network collapsed last year, shortly before Cooperative Bank’s financial problems came to light.
The £1.3 billion pretax annual loss for 2013 included credit impairments of £516 million, conduct and legal risk costs of £412 million and £148 million write down related to information technology.
On an after-tax basis, including the proceeds of the capital infusion, the bank posted a loss of £748.9 million in 2013, compared with a loss of £509.1 million in the prior year.
On Friday, the bank also said it would seek to recoup compensation paid to Paul Flowers, its former chairman and a Methodist minister, saying he was found to be in breach of agreement under which he left the bank.
In November, The Mail on Sunday, a British tabloid, reported that Mr. Flowers was covertly filmed counting out money to buy illegal drugs just days after he appeared before Parliament to answer questions about his leadership at the bank.
Mr. Flowers, who left the bank in June, has apologized for his “stupid and wrong†behavior. He has been suspended by the church and was arrested as part of a police inquiry in November.
Mr. Flowers was to be paid £95,000 in three installments after he left the lender, Cooperative Bank said in its annual report. Following the first payment, Mr. Flowers was found to be in breach of the agreement, the bank said. No further payments have been made and the bank said it is seeking to recoup the first installment.
After joining the bank as C.E.O. in June, Mr. Booker received £1.7 million in compensation in his first six months on the job, including a base salary of £699,000.
