Announcement on the Co-operative Bank

Dear Member,

As you will be aware the Co-op Bank has had widely publicised problems leading to a need to raise £1.5bn of extra capital to satisfy the Regulator that it is financially sound.

We wanted to take this early opportunity to reassure you that we are monitoring this sensitive situation on behalf of our members and wanted to update you on the latest position.

The Board of Shared Interest has been considering ways to manage the potential risk to the Society and has commenced a process of ensuring that a proportion of our capital is deposited outside of the Co-op Bank. This diversifies the risk but cannot be achieved very quickly as a proportion of our funds are tied up on fixed term deposits (in order to maximise interest earned).

The latest statements from the press and the Co-operative Group indicate that a deal has been struck in principle to ensure the survival of the Co-op Bank. We understand that this, however, comes at a price with the Co-op Group relinquishing control and remaining as a 30% shareholder - albeit the largest single stake. A significant proportion of the other shares would initially be owned by former creditors of the Bank but this does mean that their mutual status will change dramatically.

Encouragingly the CEO of the Co-op Group is quoted as saying "This bank will remain the Co-operative Bank......We are embedding the co-operative principles in the constitution of the bank to guarantee this". It is our Board's agreed view that, this news means that any risk to the survival of the Co-op Bank and the safety of our deposits at this point is much reduced, and this is obviously welcome news.

We do however want to reassure members and potential investors in the Society that we are; a) continuing a strategy of reducing dependence on any one bank and; b) currently reviewing whether the Co-op Bank remains the optimal main banking partner for Shared Interest. This will look at the same major aspects we considered in 2011 when we last formally reviewed our banking arrangement - the ethics of the organisation, security and pricing.

The position with the Co-op Bank is developing quickly and we will update this note as appropriate and as we have further information. If in the meantime you would like to discuss our position further please do not hesitate to get in touch with our Finance Director, Tim Morgan or on 0191 2339100.