The Financial Climate - your questions answered

As the world economy goes through some pretty testing times, it's hardly surprising that many of you have questions about the safety of your savings and investments. We've asked our experts to answer a few of your most common questions.


How do I know my money is safe with The Co-operative Bank p.l.c.?

Our firmly embedded responsible lending policy reflects our belief that as customers and members, it's your money first and foremost, and you have a right to expect good stewardship.

The Bank's financial position is strong, which is reflected in our credit ratings. We also have one of the highest liquidity ratios in the marketplace – that is, our assets are relatively easy to convert into cash should we need to. On top of this the Bank is well capitalised, i.e. we have a good cushion of reserves.

The Bank maintains a prudent approach to lending, and its underwriting and arrears management processes are subject to regular review and improvements. The Bank's loan books are high quality with low Loan to Value ratios, which provide significant protection against future falls in property values.

Find out more in our financial results.

Will The Co-operative Bank p.l.c. encounter problems if the UK has a recession?

Although we are not immune from the economic situation, our performance shows that as a business, we are achieving steady growth.

We are also investing in our business, to ensure that we are able to provide products to our customers and members that are absolutely in line with our co-operative principles of value, fairness and social responsibility. We're confident that this will help our business grow further still.

I have a mortgage with The Co-operative Bank p.l.c. Is what happened to Northern Rock or HBOS likely to happen to you?

No. A crucial difference between ourselves and many of our competitors is that we are not reliant on the financial markets in order to lend to customers. Our lending is fully funded by customer deposits, leaving us a good deal less exposed to the vagaries of the market than many of the major lenders.

The HBOS situation in particular highlights the risks to businesses whose shares are traded on the stock market, where they can become exposed to speculators. Our business structure means that we are accountable to The Co-operative Group and its members and aren't at the mercy of speculators who have no affinity with our business.

Does the current crisis affect our ability to pay General Insurance claims?

We typically pay claims from the premiums we receive in any given month so there is no real risk to our ability to pay claims on an ongoing basis. In the event of a major catastrophe where the cost of claims may exceed premiums received, we have a substantial portfolio of government bonds, which are very liquid and would enable us to meet our obligations. So we do not envisage a material risk to our ability to pay claims.

Our ongoing GI Growth programme is helping us to improve our capacity to manage major claims without compromising the business.

Is my money covered under the Financial Services Compensation Scheme?

Your eligible deposits with The Co-operative Bank are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit protection scheme. This limit is applied to the total of any deposits you have with the following: The Co-operative Bank, smile and Britannia. Any total deposits you hold above the £85,000 limit between these brands are not covered.

Further information is available at www.fscs.org.uk.

Which parts of The Co-operative Banking Group are covered by the Financial Services Compensation Scheme?

The following firms are individually covered by the Financial Services Compensation Scheme:

  • The Co-operative Bank p.l.c.
  • Co-operative Insurance Society Limited
  • CIS Unit Managers Limited
  • CIS Policyholder Services Limited
  • CIS General Insurance Limited