The Co-operative Banking Group: From Crisis to Growth

The Co-operative Banking Group has undergone a remarkable transformation from crisis to growth. The group's roots date back to 1869, but it wasn't until the early 2000s that the Co-operative Banking Group began to expand its operations.

The Co-operative Banking Group's crisis was largely due to the financial crisis of 2008, which led to a significant decline in its stock price. However, the group's management team took swift action to address the crisis.

The group's growth can be attributed to its strategic acquisitions, including the acquisition of Britannia Building Society in 2009. This acquisition not only expanded the group's customer base but also strengthened its financial position.

The Co-operative Bank has a rich history that spans 140 years, having been in the financial services sector since its inception.

It's impressive to think about how far the bank has come, especially considering it launched the UK's first ever full internet bank, 'Smile', in 1999.

The Co-operative Bank merged with Britannia Building Society in 2009, creating a stronger entity under the umbrella 'The Co-operative Banking Group'.

This merger was a significant move for the bank, allowing it to expand its reach and services to customers.

The bank's presence on the high street was previously limited to just 342 branches, but with the acquisition of Lloyds, it will now have over 1,000 branches, giving it a much stronger presence in the market.

The bank is also acquiring the brands TSB and Cheltenham and Gloucester (C&G), further expanding its reach and customer base.

With 11 million customers, including almost 7% of the current account market, The Co-operative Bank is becoming a major player in the financial services sector.

In April 2013, The Co-operative Group withdrew from purchasing the "Verde" business due to concerns it wasn't in the best interests of its members.

The Co-operative Bank faced significant financial difficulties in May 2013, with Moody's downgrading its credit rating to junk status. This was largely due to the commercial loans from the Britannia Building Society, acquired in the 2009 merger.

Euan Sutherland took over as Co-operative Group chief executive in May 2013, and Niall Booker was appointed Chief Executive of The Co-operative Bank.

In April 2014, an independent review concluded that the Co-operative Bank's problems stemmed from its 2009 takeover of the Britannia Building Society and poor management controls.

The bank's auditors, KPMG, were fined £4 million for misconduct related to the valuation of Britannia's commercial loans and other liabilities by the Financial Reporting Council in 2019.

The Co-operative Group had lost majority control of its banking arm by October 2013, with a plan to reduce its ownership to 30% after renegotiating the bank's £1.5 billion rescue with US hedge funds.

This significant loss of control was a result of the original rescue plan being altered to accommodate the hedge funds' demands.

In 2017, the bank's board announced that they were commencing a sale process for the bank and inviting offers.

This decision was supported by the Co-operative Group, which also indicated that it was considering options other than a sale to build capital.

The bank's total losses since its financial crisis had already reached £2.6 billion by June 2017.

Institutional bondholders agreed to convert £426 million of bonds into equity, giving them a 17% stake in the bank.

Existing investors also agreed to put £250 million of new equity into a newly established holding company, which would take a 68% stake in the bank.

The investors also agreed to add £100 million over 10 years to the bank's pension fund and provide over £200 million of collateral to assist in separating the bank's pension from that of the Co-operative Group.

These arrangements were implemented in September 2017, and the Co-operative Group's remaining 1% stake was sold shortly afterwards for £5 million.

The bank reduced staff numbers by 800 in 2017 and made a pre-tax loss of £174.4 million, a significant improvement on the previous year's loss of £477.1 million.

During the first half of 2017, the bank lost a further 25,000 current account customers due to the uncertainty surrounding its sale.

Before the financial crisis, the Co-operative Bank was owned by a holding company called The Co-operative Group, which is a co-operative itself. This means customers indirectly had an ownership interest in the bank through membership.

The bank's customers could become Co-operative Group members, allowing them to earn dividends on their account holdings and borrow with the bank. This was a unique feature of the Co-operative Bank, setting it apart from other financial institutions.

Approximately 2,500 preference shareholders also existed, with fixed-interest shares that were irredeemable. These shareholders could attend general meetings but only had speaking and voting rights in specific circumstances.

The Co-operative Bank's structure was distinct from other co-operative banks, such as Rabobank, which had a federal structure of local banks.

The bank's commitment to charity and community is truly inspiring. In 2018, they partnered with youth homelessness charity Centrepoint, raising over £1m to fund a national helpline and a specialist helpline service in Manchester.

This partnership had a significant impact, providing crucial support to those in need. The bank also partnered with charity Refuge, successfully lobbying for a new banking industry code of practice to protect customers affected by financial abuse.

The Co-operative Banking Group has shown resilience in the face of economic downturns, with its assets growing from €20 billion in 2008 to €30 billion in 2010.

After the financial crisis, the group's focus shifted to sustainability and social responsibility, with a commitment to reduce its carbon footprint by 50% by 2025.

The group's diversified business model, which includes retail banking, insurance, and asset management, has helped it weather economic storms.

It has also invested heavily in digital transformation, with plans to introduce 100 new digital services by 2023.

The group's commitment to social responsibility has been recognized through its receipt of the European Social Responsibility Award in 2012.

The Co-operative Bank Structure is quite unique, with a mix of ownership and governance that sets it apart from other banks. It's a mutual organization, meaning it's owned by its members who are customers.

The bank has a single-tier board structure, with a clear distinction between ownership and governance. This means that the board of directors is responsible for overseeing the bank's strategy and operations.

The Co-operative Bank has a strong focus on social responsibility and community development, which is reflected in its ownership structure. Members have a say in the bank's direction and decision-making process.

The bank's members elect representatives to the board of directors, ensuring that the organization remains accountable to its customers. This level of member involvement is a key feature of the Co-operative Bank's structure.

The Co-operative Bank has a long history of prioritizing its members' interests, dating back to its founding in 1872. This commitment to member ownership and control has remained a core part of the bank's identity.

The Co-operative Bank's approach to banking is unique and customer-led. Their Ethical Policy, which has been informed by customer views for over 30 years, guides how they do business and what issues they will campaign on.

This policy has led to the bank turning away over £1 billion in loans from companies that contradict their values. They also have a strict customer-mandated policy that sets out who they will and won't do business with.

The bank's commitment to co-operative values has underpinned their approach since they were established in 1872. They have enshrined co-operative values into how they operate.

Co-op Bank has committed over £3 million in funding to help new and growing co-operatives and community enterprises. This investment has helped more than 1,000 groups and co-operatives to grow skills, create sustainable businesses, and act on issues to deliver real positive change.

Here are some of the benefits of banking with The Co-operative Bank:

The Co-operative Bank has a rich history dating back to 1872, with roots in the co-operative movement. They've been committed to co-operative values for over 140 years.

Their unique Ethical Policy has guided their business approach for over 30 years, informed by the views of their customers. This policy sets out what issues they'll campaign on and how they'll do business.

Since 2016, the bank has invested over £3 million in funding for new and growing co-operatives and community enterprises. This investment has helped more than 1,000 groups and co-operatives grow skills and create sustainable businesses.

The bank has a strict customer-mandated Ethical Policy that sets out who they won't do business with. This includes companies that manufacture or sell indiscriminate weapons, fail to uphold basic human rights, or have poor records on labour rights.

Co-op Bank has turned away over £1 billion in loans from companies that contradict their ethical values since the launch of this policy in 1992.

Our partner, The Co-operative Bank, offers a special banking service for co-operatives. This service is called the Community Directplus Account.

With this account, you get free everyday community banking, which means no monthly service fee. This is a big plus for co-operatives, as it can help save money on banking costs.

The Community Directplus Account also comes with a Customer Donation Fund, which allows account holders to apply for up to £1,000 to support special projects and fundraising activities. Since 2003, over £1.1 million has been donated to over 1,300 community projects through this fund.

You can also use the Go Get Paid app to help you do business on the go. This app allows you to request payments, manage cashflow, and automate financial admin.

Additionally, you get 50% off a year's subscription to Zellar, a digital platform that helps you understand your impact across multiple areas of sustainability and build a plan to reduce it.

Co-op Bank's customer service is definitely one of the good ones. They scored 88% in Which?'s latest customers satisfaction report, ranking them second best current account provider.

Smile, a part of Co-op Bank, was ranked second best overall with a score of 88%. First Direct was just ahead with 93%.

Co-op Bank came in at number four with 85% customer satisfaction score. This is impressive, especially when compared to Lloyds TSB's score of 48%.

In savings, Co-op Bank also fared extremely well, coming in second behind First Direct with a customer satisfaction score of 67%. This is 14% higher than the average score of 54%.

The banking group received 22,520 complaints in the second half of last year that it was unable to resolve within 24 hours. This works out at 2.09 complaints per thousand accounts.

A significant number of these complaints, 11,376, were about payment protection insurance (PPI).

Co-op's products are quite impressive, especially when it comes to fixed rate savings and mortgages. According to Moneyfacts, Co-op Bank's fixed rate savings and fixed rate mortgages make it into its best buy tables.

The bank has a strong presence in the market, having appeared in Moneyfacts' paper charts 20 times since November 2009 for mortgages. Lloyds, on the other hand, has made it into these charts 627 times since February 2010.

Co-op Bank and its online sister bank Smile offer very competitive current accounts for those who frequently slip into their overdraft. Co-op Bank's free Current Account Plus offers customers a fee-free £200 overdraft if they pay in at least £800 a month.

Smile's current account, which is also free, offers its customers a £500 overdraft free of charge for 12 months.

The Co-operative Banking Group has faced its fair share of technical issues over the years.

In 2009, the bank's business internet banking service crashed when more than 130 users logged on simultaneously, leaving some customers unable to access their accounts for days.

This incident highlights the potential consequences of inadequate infrastructure and capacity planning.

The Co-operative Bank's IT problems persisted in 2011, causing some customers to be temporarily unable to use their debit cards.

These issues demonstrate the importance of robust technical systems and contingency planning in banking.

As recently as 2021, the bank's Open Banking service suffered a "temporary outage", which has continued to affect customers in 2023.