Information for customers about our latest financial results announcement

30 July 2020

3 min read

Thank you for continuing to be a loyal customer of The Co-operative Bank / smile.

Our key priority during 2020 has been to provide our customers with the reassurance and financial support you need as the coronavirus pandemic has made the way we live our lives very different and will likely continue to impact for some time.

We have made significant progress with our plans to transform The Bank over the last few years, and we are grateful for the ongoing support of our customers, the hard work of our colleagues and the support of our shareholders, which has enabled us to enter this period in a resilient position.

Today we are reporting our financial performance for the first six months of 2020, the full details of which are available here:

Our update reflects that whilst this is a challenging market for all banks, our plans are on track and we are performing better than we expected, with increased balances and new customers.

Part of the announcement today talks about our ability to raise MREL, which is the additional layer of capital that all banks are obliged to raise by January 2022. We wanted to provide reassurance about the reference to a “material uncertainty” relating to The Bank’s plans to raise this additional capital in the future. This is an accountancy term and it refers to the fact that, whilst our plan is to issue the first tranche of MREL before the end of the year, more difficult wholesale market conditions given COVID-19 create some uncertainty over timing. We want our customers to know that this does not reflect The Bank’s existing capital position and current financial performance, but is something we are required to refer to in our financial report. We’ve also given more detail on this in the Q&As below.

At a time when community and co-operation have really helped people to work together through a difficult and unprecedented period, we are proud to remain committed to supporting our customers. We continue to be driven by our unique customer-led Ethical Policy and the co-operative values and ethics that are at the heart of our business.

From all of us at The Co-operative Bank, thank you for continuing to be our customer.

Andrew Bester

Chief Executive


What does the term ‘material uncertainty’ mean in the results?

This is an accountancy term and it refers to the unpredictable nature of capital markets and our ability to raise MREL, which is the additional layer of capital that all banks are obliged to raise by January 2022. It is not a reflection of the current financial performance of The Bank, which is in a resilient position with a strong CET1 ratio. We are committed to achieving our future MREL requirements and our plan remains to do so by January 2022.

What does MREL mean and what does CET1 mean? And what is CET1 Ratio?

MREL stands for: Minimum Requirement for own funds and Eligible Liabilities.

CET 1 stands for: Common Equity Tier 1. It is a measure of a Bank’s capital strength. The CET1 Ratio is the score that gauges how strong a bank’s capital is. The minimum required for The Bank is 10.7% and we are currently showing a strong ratio of 18.2%, far above the minimum required.

MREL is the additional amount of capital that the Bank of England requires all large and medium size UK banks to hold, over and above their regulatory capital requirements. All UK banks have a target MREL to meet by January 2022.

What does this mean for me?

The announcement today will not affect how we service our customers or the products that you have with us. Our shareholders are supportive of The Bank’s plans to move forward and we will continue to review and work towards meeting our MREL requirement for January 2022.

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