Announcement on the Co-operative Bank
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 firstname.lastname@example.org
or on 0191 2339100.