Compliance with Capital Requirements Directive (CRD V)

The fifth Capital Requirements Directive (CRD V) requires an institution such as The Co-operative Bank p.l.c. (the Bank) to include a compliance statement on its website in relation to certain articles contained in CRD V. A statement of the Bank’s compliance with CRD V governance, remuneration and reporting can be found here:

Statement of Compliance with Article 96 of the Capital Requirements Directive (CRD V)

The Co-operative Bank p.l.c. is authorised and regulated by the Prudential Regulation Authority and regulated by the Financial Conduct Authority.

Article 96 of the Capital Requirements Directive (CRD V) requires the Bank to publish a statement, on its website, on how it complies with the requirements of Articles 88 to 95 of CRD V.

Governance Arrangements

The Board has collective responsibility for the long term success of the Bank. Its role is to provide leadership of the Bank within a framework of prudent and effective controls which enables risk to be assessed and managed. It sets the Bank’s values and standards and ensures that its obligations to its shareholders, customers and other stakeholders are understood and met.

The Board sets the Bank’s strategy and approves plans presented by management for the achievement of the strategic objectives it has set. It determines the nature and extent of the significant risks it is willing to take in achieving its strategic objectives and is responsible for ensuring maintenance of sound risk management and internal control systems.

The Bank’s Chair is a Non-Executive Director who leads the Board in the determination of its strategy and in the achievement of its objectives. The Chair takes personal responsibility for organising the business of the Board, ensuring its effectiveness and setting its agenda. The Chair has no involvement in the running of the day to day business of the Bank. Her role is to facilitate the effective contribution of Directors, constructive relations between the Executive and Non-Executive Directors, ensure Directors receive accurate, timely and clear information and that there is effective communication with the sole shareholder. The division of responsibilities between the Chair and the Chief Executive is clearly defined and approved at Group board level.

Directors’ Induction and Continuing Development

All newly appointed Directors undertake a structured induction programme which is designed to provide them with key business information about the Bank, and includes briefing sessions with members of the Executive team and, where appropriate, a branch visit. As part of the approved persons’ process an individual training plan is designed for each Director which is reviewed periodically. The Board holds collective training sessions which are scheduled at regular intervals in close proximity to Board meetings and during each financial year. In addition to formal training sessions, the Directors, where appropriate, have one-to-one sessions with members of the Executive. The Chair’s role is to address the development needs of the Board as a whole, with a view to developing its effectiveness. She ensures that the Directors’ professional development needs are identified and that they are adequately informed about the Bank and their responsibilities as Directors. A number of external consultants provide from time to time professional advice to the Board. There is an agreed procedure by which the Directors may take independent professional advice at the Bank’s expense in furtherance of their duties.

Board Committees

The Board has established Board Committees, namely, the Board Audit Committee, the Board Risk Committee, the Board Values & Ethics and Nomination Committee, and the Board Remuneration Committee.

All Board Committees have terms of reference describing the authority delegated to them by the Board. Each of these Committees has a role in ensuring the effective oversight by the Board of the Bank and its subsidiaries. The terms of reference for the Board Audit Committee, Board Risk Committee, Board Values & Ethics and Board Nomination Committee and Remuneration Committee can be found here.

Board Values & Ethics and Nomination Committee (jointly with the Group Board Nominations and Governance Committee)

It is the role of the Board Values & Ethics and Nomination Committee to review and make recommendations: on the composition of the Board; on succession planning for Executive Directors, Non-Executive Directors and certain Senior Executives; identifying and nominating candidates for Board vacancies; and on the evaluation of candidates for the Board.

The Board Values & Ethics and Nomination Committee keeps under review the leadership needs of the organisation, both executive and non-executive, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace.

The Committee shall:

• Evaluate the balance of skills, knowledge, independence, experience and diversity on the Board, and, in the light of this evaluation prepare a description of the role and capabilities required for a particular appointment. In identifying suitable candidates the Committee shall:
  • use open advertising or the services of external advisers to facilitate the search
  • consider candidates from a wide range of backgrounds
  • consider candidates on merit and against objective criteria and with due regard for the benefits of diversity on the Board, including gender and ethnic minorities, taking care that appointees have enough time available to devote to the position
• For the appointment of a Chair, the Committee should prepare a job specification, including the time commitment expected, recognising the need for availability in the event of crises. A proposed Chair’s other significant commitments should be disclosed to the Board before appointment and any changes to the Chair’s commitments should be reported to the Board as they arise, and their impact explained in the next annual report.
• Prior to the appointment of a director, the proposed appointee should be required to disclose any other business interests that may result in a conflict of interest and be required to report any future business interests that could result in a conflict of interest.
• Ensure that on appointment to the Board, non-executive directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment, committee service and involvement outside Board meetings.
• Review the results of the Board performance evaluation process that relate to the composition of the Board.
• Review annually the time required from non-executive directors. Performance evaluation should be used to assess whether the non-executive directors are spending enough time to fulfil their duties.
• Keep under review the Group's policy on diversity, including gender and ethnic minorities, and the measure of objectives that it has set in implementing the policy, and progress on achieving the objectives.
• Ensure the terms of reference are published on the Bank’s website.

The Committee shall also make recommendations to the Board concerning:

• Formulating plans for succession for directors and non-executive directors and in particular for the key roles of Chair and Chief Executive.
• The appointment of directors and non-executive directors.
• The appointment of the company secretary and the Chief Risk Officer, in consultation with other Board Committees.
• Membership of the Board Audit, Board Remuneration, Board Risk Committee, Board Values & Ethics and Nomination Committee, and any other Board Committees as appropriate, in consultation with the Chairs of those Committees and in so doing have regard to the benefits of cross-committee membership and committee membership rotation to refresh committee viewpoint and support Directors’ continuing skills and professional development.
• The re-appointment of any non-executive director at the conclusion of their specified term of office having given due regard to their performance and ability to continue to contribute to the Board in the light of the knowledge, skills and experience required.
• Any matters relating to the continuation in office of any director at any time including the suspension or termination of service of an executive director as an employee of the Bank subject to the provisions of the law and their service contract.

All Non-Executive Directors are appointed to the Board for an initial term of three years.

The Board considers diversity, including gender and ethnic minorities, to be an important part of the construction of the search mandates for new appointments to the Board.

Board Remuneration Committee

The Board Remuneration Committee has the delegated responsibility to determine remuneration for the Executive Directors and the Executive Committee of the Bank, and to set and recommend to the Board for approval, the overarching principles and parameters of the Remuneration Policy across the Bank to ensure an overall coherent approach to remuneration for all employees. In addition, the Remuneration Committee ensures remuneration is compliant with the dual-regulated firms' Remuneration Code.

The Remuneration Committee is comprised of non-executive directors and regularly consults with the Chief Executive Officer, Group Chief People Officer, Company Secretary and Chief Risk Officer, all of whom may attend meetings of the Committee but are not present when their own remuneration or terms and conditions are being considered. The Head of Reward also provides advice on compensation and benefits to the Committee. The Company Secretary advises the Committee on corporate governance. The Remuneration Committee receives support and advice from external advisors and, from time to time, will undertake due diligence to ensure that the advice it receives is independent.

The Committee works closely with the Chairs of the Board Risk Committee, Board Audit Committee, and Board Values & Ethics and Nomination Committee.

Remuneration Policy

Information relating to Non-Executive and Executive Director remuneration can be found in the Directors’ Report on Remuneration in the Group's 2025 ARA.

Country-by-Country Reporting

For the purposes of Article 89, the Bank operates in the United Kingdom.

Public Disclosure of Return on Assets

The Bank publicly discloses within its annual report among its key indicators the Bank’s return on assets, calculated as net profit divided by total balance sheet.