UK's Co-op Bank sells $2.5 bln of loans under turnaround plan

LONDON, Nov 12 (Reuters) - Britain's Co-operative Bank said its cost-savings plan was on track and it sold 1.65 billion pounds ($2.5 billion)of home loans last quarter as part of its plan to cut assets it no longer wants.

Co-operative Bank, which came under the control of bondholders in 2013 after almost collapsing and is now going through a major restructuring, said on Thursday it had securitised 3.14 billion pounds of loans out of a 6.5 billion pound Optimum portfolio of residential mortgages it regards as non-core and plans to sell.

It (Other OTC: ITGL - news) said it will not securitise any more of the portfolio this year and the deleveraging of its non-core assets was on track with the recovery plan agreed with the UK financial regulator at the end of last year.

The impact of the latest deal in September, plus receipts Co-op Bank will get from the sale of Visa Europe to Visa Inc (Xetra: A0NC7B - news) - including 56 million euros ($60.09 million) in cash and about 35 million euros in shares - would increase the bank's common equity capital ratio to about 16.4 percent from 14.9 percent at the end of June, it said.

Co-op Bank said it had shut 57 branches this year, in line with previous announcements, and its cost savings were "slightly better than plan" due to outsourcing, reducing its ATM (LSE: 0LRG.L - news) network and improved control of third-party costs.

It said it originated 1.81 billion pounds of mortgages in the year to the end of September. Margins were under pressure due to strong competition in the mortgage market, but that had been more than offset by reducing the cost of its funding, it said.

Co-op Bank has said it is unlikely to make a profit until at least 2017, delaying its plans for a stock market listing. ($1 = 0.6583 pounds) ($1 = 0.9319 euros) (Reporting by Steve Slater; editing by Susan Thomas)