Building a unique, mutual alternative in financial services

Mutuals Forum 2009

Neville Richardson

Chief Executive -

Co-operative Financial Services

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About me

• Joined the Board of Britannia Building Society in 1998

• Appointed Chief Executive of Britannia on 1 November

2002 and of Co-operative Financial Services following

the merger on 1 August 2009

• BSA Council and Mutuo Board Member

• Married to Sara

• Three daughters and two step children

• A keen Manchester City and Sale Sharks supporter

• Other interests include theatre, running, watching

cricket, rugby and most sports

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About Co-operative Financial Services

• Part of The Co-operative Group – world’s largest consumer co-operative

• Respected for its values and traditions

• Over 5,000 retail outlets

• 123,000 employees

• Groundbreaking merger with Britannia Building Society on 1 August

• Diversified member-owned, customer-led, ethically guided business

• Significant presence in the UK financial services sector - £76bn assets, 12,000 employees, 350 branches, 9 million customers

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Content

• Our merger context

• Market context

• Our heritage

• Developing the strategy

• The future

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Our merger context

• Opportunity in the market for a trusted, genuine alternative

• Two financially strong organisations – merging from a position of strength

• Complementary product ranges

• Significantly extended distribution

channels

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Key merger dependencies

‘Butterfill Act’ – Building Societies (Funding) and Mutual Societies (Transfers) Act 2007

• Allows mergers of different types of mutuals

• Required secondary legislation

• Secondary legislation for building societies to merge into co-operatives came into force in January 2009

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Key merger dependencies

• Britannia Member vote• No windfall payment

• AGM – 29 April 2009

• Overwhelming endorsement

• 88% vote in favour

• FSA approval• Approved on 25 July 2009

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Commitment to Britannia members

Everything our members loved about Britannia

• Remaining Mutual

• Commitment to an extensive branch network

• Receiving a share of the profits

and much more……….

• Enhanced products and services

• Benefit of being part of a larger,

mutually owned group

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Market context

Lehman Brothers collapsesends shockwave roundworldThe Times, 16 Sept 2008

Third Iceland Failure The Daily Express, 10 Oct 2008

HBOS – Lloyds TSB: Biggest rescue deal in British banking history The Telegraph, 22 Sept 2008

Financial crisis: Government to

take majority stake in RBS The Telegraph, 12 October 2008

Britain faces years of tax rises as

Bank bailouts add £1.5 TRILLION to

public debtThe Mail, 20 Feb 2009

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Britannia and CFS shared heritage

Strong strategic and values fit

• What is strategy? – Core values and ambitious plans

• Values-led cultures

• Balanced scorecard approach

• Market leading employee engagement

• Industry leading customer advocacy

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Developing the strategy

‘New Entity’Values

CFSValues

BritanniaValues

Co-operative GroupValues & Principles

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Developing the strategy

Our purpose is…

• To be a pioneering business delivering sustainable financial services for members and society

Our givens are…

• We champion co-operative values and principles and ethics

• We are financially prudent and strong

• We share profits with members

• We only do business consistent with our values and principles

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Developing the strategy

Our vision is…

• To be the UK’s most admired financial services business

Our values as a co-operative are…

• We put our members and customers first in all we do

• We take personal and social responsibility

• Together we will create a great place to work,grow and develop

• We strive relentlessly to be faster, better, more successful

• We are open and fair and are committed toexcellent communication

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Developing the strategy

2012

What will people start to see next?• Current accounts in Britannia

• Fixed rate cash ISAs in Co-operative Bank branches

• Major systems integration

• Integration of branch networks

• Single brand identity

• Cultural integration

Now

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The futureAn exciting opportunity for a mutualalternative

• Further mergers made possible by the Butterfill Act

• Enhanced co-operation amongst mutuals

• We remain true to our core values

• Member-owned, customer- led, ethically guided

• Groundbreaking, ethical alternative to PLCs within UK financial services