The Co-operative Bank p.l.c. is a British retail and commercial bank based in Manchester, England. Established as a bank for co-operators and co-operatives following the principles of the Rochdale Pioneers, the business evolved in the 20th century into a mid-sized British high street bank, operating throughout the UK mainland. Transactions took place at cash desks in Co-op stores until the 1960s, when the bank set up a small network of branches that grew from six to a high of 160; in 2023 it had 50 branches.
The Co-operative Bank is the only UK high street bank with a customer-led ethical policy which is incorporated into the bank's articles of association. The policy was introduced in 1992 and incorporated into the bank's constitution in 2013, then revised and expanded in 2015 in line with over 320,000 customer responses to a poll.
Despite its name, the bank has never been a cooperative itself. In the 1970s it was registered as a separate plc that was wholly owned by the co-operative society it was part of, in order to achieve its status as a bank among other banks entitled to use inter-banking systems. That society, The Co-operative Group, maintains some relationship with the bank, including managing the licensed use of the Co-operative brand.
In 2013–2014, after a merger with Leek-based Britannia Building Society, a failed attempt to buy a larger rival and a troubled commercial property loan portfolio, the bank was the subject of a rescue plan to address a capital shortfall of about £1.9 billion. The Co-operative Group, which had previously owned the bank outright, became a minority shareholder with a 20% stake. Following restructuring and the formation of a new holding company on 1 September 2017, the Co-operative Group no longer had a stake in the bank and the relationship agreement between the two organisations ended in 2020.
In May 2024, Coventry Building Society agreed to purchase The Co-operative Bank. Regulatory approval was granted in November 2024 and the acquisition completed on 1 January 2025.
History Origins
The bank was formed in 1872 as the Loan and Deposit Department of the Co-operative Wholesale Society, becoming the CWS Bank four years later. However, the bank did not become a registered company until 1971, when the (c. xxii) separated the banking business from the Co-operative Wholesale Society.Certificate of Incorporation 5 October 1970 retrieved 4 December 2022 from Companies House. In 1975, the bank became the first new member of the Committee of London Clearing Banks for 40 yearsCo-operative Financial Services – the Co-operative Bank. Retrieved 18 December 2008. and thus able to issue its own cheques.
Expansion The bank merged with the Britannia Building Society in 2009, increasing its branch network to 373 branches.
Following the UK government's acquisition of 43.4% of Lloyds Banking Group in 2009, the Co-operative Bank entered into negotiations with Lloyds Banking Group to purchase over 600 of its branches. The purchase was publicly announced in July 2012 and it was revealed that the branches would be initially split from Lloyds under the resurrected TSB brand. On 24 April 2013 the Co-operative Bank announced that it had decided against proceeding with the deal. The reasons given were the poor economic outlook in the UK and an increase in financial regulation requirements. The Financial Times had previously reported that the Co-operative would require a £1 billion increase in capital to support enlarging the bank.
2013 financial crisis
In March 2013 the bank reported losses of £600m. In May Moody's downgraded its credit rating by six notches to junk (Ba3) resulting in the chief executive Barry Tootell's resignation.
Over the weekend of 15–16 June 2013 negotiations between the Co-operative Group and its regulator the Prudential Regulation Authority culminated in reports that the bank had a shortfall in its capital of about £1.5 billion, and that this would be filled by a procedure known as a "bail-in" scheme. Bank chairman Paul Flowers resigned shortly before the announcement of the shortfall. A press release by the bank issued on 17 June 2013 explained that the scheme would compel subordinated (also known as junior) bondholders to convert some or all of their assets from debt instruments to ownership ("equity") shares of uncertain value which would be listed on the London Stock Exchange and a new fixed income instrument. The scheme contrasted with the rescues of other British banks in 2008 and 2009 when central government introduced new capital into the failed institutions. Details of the outcome for small retail investors in the bank were uncertain at the time of the June announcement, but there was no suggestion that ordinary deposits in the bank would be put at any additional risk by the rescue, as they would continue to be covered by the existing compensation scheme. The bondholders had the opportunity to seek to reject the restructuring proposed, and an alternative option of the Bank of England taking over the ownership of the bank under the Banking Act 2009 special resolution regime was considered.
In September it was discovered that there was a £3.6bn funding gap between the value the Co-operative Bank placed on its loan portfolio and the actual value it would realise if forced to sell the assets. In October it was reported that the Co-operative Group had been forced to renegotiate the bank's £1.5bn rescue with US hedge funds Aurelius Capital Management, Beach Point Capital Management, and Silver Point Capital that owned its debt. As a result, the group would lose majority control of its banking arm with the proportion of the bank's equity remaining under its ownership dropping to 30%, less than the 75% proposed in the original rescue plan. The plan passed a creditor vote and on 18 December 2013 a judge on the High Court of England and Wales allowed the plan to move forward.
An independent review commissioned by the bank, published in April 2014, concluded that the root of the bank's problems lay in its 2009 takeover of the Britannia Building Society and poor management controls. The bank's auditors, KPMG, were fined £4 million for misconduct shortly after the takeover of Britannia, particularly the valuation of Britannia's commercial loans and other liabilities, by the Financial Reporting Council in 2019.
2014–16 rehabilitation The bank's chief executive at the time, Niall Booker, a former banker at HSBC who nursed HSBC's sub-prime lending business back to health, was appointed in 2013. He attempted to refocus the bank's strategy as a retail and SME lender. At this point, the bank was Britain's seventh biggest lender, and the majority of the bank's revenue was made from interest charges on loans.
Flotation on the London Stock Exchange was planned for 2014 but the plans were abandoned in March 2014 when a rights issue was announced to raise an additional £400 million. In May 2014 the bank finalised the £400 million fundraising plan and obtained shareholder approval, which reduced the Co-operative Group's ownership of the bank to just over 20%.
The Co-operative Bank lost 38,000 current account customers in the first half of 2014 after suffering what it called a "hurricane of negative publicity" following the lender's near collapse. However, this loss was partly offset by 9,700 who switched to the bank – double the number who joined six months earlier, resulting in a net loss of 28,199 customers (around 2% of the bank's total). The rate of loss slowed significantly in 2015, resulting in a loss of 2,250 current account customers between January and August of that year. Overall, between 2014 and 2017, the number of current account holders dropped from 1.5 million to 1.4 million.
Nevertheless, the bank reported progress in its rehabilitation, as its losses sharply narrowed and it strengthened its capital position. Figures released by the bank in August 2014 for the first half of the year showed a pre-tax loss of £75.8 million was identified, compared to £844.6 million for the same period in 2013. Co-op Bank also said its core Tier 1 capital ratio, a key measure of financial strength, stood at 11.5 percent at the end of June and was expected to be significantly above the previous guidance of 10 percent at the end of 2014. However the bank, as expected, was unable to meet the new Bank of England financial stress tests in December 2014.
In late 2014 the bank sold its repossessed properties business for £157.5 million, and its ATM operating business for £35 million. It also outsourced its mortgage servicing operation to Capita, transferring about 660 staff to Capita.
The narrowing of losses was driven largely by a faster-than-expected reduction in unwanted assets, including significant parts of the portfolio of sub-prime mortgages the bank inherited from its merger with Britannia Building Society. Non-core assets reduced by £ billion, and credit impairments improved.Annual Report 2015 | The Co-operative Bank. Retrieved 1 April 2016. In August 2014 the bank said it had cut staff numbers by 21 percent (about 1,560 workers) in the previous year and that there were more job losses to come. The bank had also closed 46 branches, reducing its branch network by 16 percent since the start of 2014. Another 25 would close in the remainder of the year, it said. In August 2015 the bank said that it had closed 62 branches over the previous year, taking the total down to 165. This was partly due to a 28% drop in in-branch transactions resulting from a change in demand from branch to internet banking. By that point staff reductions had exceeded 2,000 workers. After the closure of 54 branches during the first three months of 2016 the bank described its programme of branch closures as "mostly finished". The total number of jobs cut by the bank between 2013 and 2017 was approximately 2,700. The closure of a further 10 branches in the spring of 2017 reduced the branch total to 95, down from nearly 300 at the start of the process.
In December 2014 a Bank of England assessment measured the bank's core capital ratio (a measure of financial strength) at minus 2.6%. As a result, the bank appointed Bank of America Merrill Lynch to help sell £6.6 billion of mortgages.
The bank was not expected to make a full-year profit until 2017 at the earliest. In August 2015 Booker said that he expected the bank would be "part of the consolidation of some of the country’s smaller banks", and that stock-market flotation would remain an option for the future. He said that there had been "no meaningful discussions" concerning the suggestion that the hedge funds which own 80% of the bank's equity were looking at buying up the Co-operative Group's remaining 20% holding.
On 1 April 2016 the bank announced a pre-tax loss for 2015 of £611 million, more than double the loss of £264m for 2014. Booker's salary rose to £3.85m from its 2014 level of £3.1m, an increase of 24.2%. In November 2016 the bank announced a reduction of the workforce to 4,015, a loss of 200 staff.
2017 restructuring, investment and proposed sale