Co-op bank sees bad debt swell

The group, which includes internet bank Smile, Co-op bank and the Co-operative Insurance Society, said that the increase occurred due to “unprecedented” levels of credit card debt as well as other borrowing for some customers.

Now the group has told the Daily Telegraph that its bad debt charges have rise to £99.8 million (from £70.7 million) in the year to January 14th.

In a statement it said that the deterioration in the credit climate reflects the high levels of consumer indebtedness, as well as the “significant rise” in personal bankruptcy declarations.

From a corporate point of view though CFS is not overly concerned with the levels of bad debt as long as unemployment and interest rates remain low.

Commenting, ClearDebt CEO, David Mond, said: “CFS are not the first financial services group to feel the impact of a rise in personal insolvency.

“If the number of Individual Voluntary Arrangements rises as predicted this year, then banks and credit card companies could see total debt at risk, from this source alone, of well over £1 billion.”

The last year has seen the restructuring of the CFS, which David Anderson joined as chief executive in June 2005.