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Five things to know about the Co-op Bank
The Co-op has agreed to buy 632 Lloyds branches, making it a real contender on the high street. We take a look at how the bank works.
by Victoria Bischoff on Jul 20, 2012 at 12:12Follow @VBischoff
Co-operative Bank is set to become a major player on the high street after agreeing to buy 632 of Lloyds' branches.
Here we take a look at how exactly the Co-operative Bank works and what sets it apart from the rest of the big banking names.
1. The Co-operative Bank
The Co-operative Bank is by no means a newcomer – it’s been in the financial services sector for 140 years. In 2009 it merged with Britannia Building Society, having previously launched the UK’s first ever full internet bank ‘Smile’ in 1999. Together the three brands exist under the umbrella ‘The Co-operative Banking Group’.
However, until yesterday Co-op Bank had just 342 bank branches. Once the Lloyds deal has been completed it will have over 1,000 branches on the high street, 11 million customers – including almost 7% of the current account market – and a presence in places it previously didn’t, such as Scotland for example. It is also acquiring the brands TSB and Cheltenham and Gloucester (C&G).
This will make Co-op a real contender to the big five banking names which currently dominate the high street – Barclays, Lloyds, RBS, HSBC and Santander.
2. Co-operative the mutual
Co-op Bank is part of the Co-operative Group – the largest co-operative in the UK with over five million members – and is the UK’s only mutually owned bank.
As a mutually owned bank it does not have any shareholders and is instead owned by its members who get a cut of the profits and have a say in how the business is run.
Anyone can be a member. All you need to do is invest £1, which the Co-operative will take from your first share of its profits. Your share of the profits depends on how many points you earn by using Co-op’s banking products and shopping at Co-op's 4,800 stores. Your points are calculated twice a year in June and November and you can then choose if you want the money in cash or vouchers – as a member you’re also entitled to exclusive offers. The remaining profit is reinvested in the business.
Those interested in getting involved in how the business is managed can also run for election as a member representative for their area and, after two years, to their regional board. Co-op claims it is guided by its co-operative values and principles – 'honesty, openness, social responsibility and concern for others'.
3. The ethical bank
Co-op Bank is the only high street bank to have a strict customer mandated ethical policy which sets out who the company will and won’t do business with.
The bank will not, for example, deal with companies which manufacture or sell ‘indiscriminate’ weapons such as cluster bombs, fail to uphold basic human rights or have poor records on labour rights by employing children or opposing trade unions.
Co-op Bank will also not deal with businesses that are involved in animal testing of household and cosmetic products or develop high climate change emission fuel like tarsands. Co-op said it instead seeks to support companies involved in recycling, renewable energy and creating sustainable natural products.
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