Launch of independent review of Co-operative Bank

July 12, 2013

Sir Christopher Kelly to chair “forensic” inquiry

The Co-operative Group and The Co-operative Bank today announce the launch of an independent review, to be chaired by Sir Christopher Kelly, into the events that led to the recent announcement of The Co-operative Bank’s capital action plan to address its £1.5bn capital shortfall. Sir Christopher currently chairs the King’s Fund and the Responsible Gambling Strategy Board and previously chaired the Committee on Standards in Public Life, the Financial Ombudsman Service and the NSPCC. He has also been a senior official in HM Treasury. He will begin work on his review in September.

The review has been commissioned by the new executive teams at the Group and the Bank, together with the Boards of both organisations, on behalf of the Group’s members. It will look at the decision to merge The Co-operative Bank with the Britannia Building Society in 2009 and the proposed acquisition of the Verde assets of Lloyds Banking Group. It will include an analysis of strategic decision making, management structures, culture, governance and accounting practices and aspects of the role of the Bank auditors. This review will assist in identifying lessons to be learned to strengthen not only the Bank and the Group, but the co-operative business model generally. The intention is to present the findings to members at The Co-operative Group's annual general meeting in May 2014.

Euan Sutherland, Group Chief Executive of The Co-operative Group, said:

“We have developed and announced a comprehensive solution to meet the capital requirements of our Bank, bringing stability to a business that is loved by its customers and members. As we move forward with implementing the detail of this plan, it is important to learn from the past. To ensure that we can do that, we are today announcing the launch of an independent review which will take a detailed and forensic look at all the relevant events and issues.

"We are delighted that Sir Christopher has agreed to chair this review. His background means he is ideally placed both to work through the events that led to the current issues in our Bank and to recommend any changes that need to be made to our ways of working.”

Sir Christopher Kelly said:

“I am pleased to be taking up this important role. The management teams and Boards at The Co-operative Group and The Co-operative Bank are determined to find out what went wrong and are giving me and my team all the support and facilities I need to run a detailed and thorough, fully independent review. I look forward to helping these important businesses and the wider Co-operative movement learn the lessons to take into the future.”

Media enquiries:

The Co-operative Group

  • Russ Brady - 07880 784442
  • Patrick Tooher - 07831 314671

Tulchan

  • David Shriver - 020 7353 4200
  • Jonathan Sibun - 020 7353 4200

Notes to Editors:

Sir Christopher Kelly Biography

Sir Christopher Kelly, age 66; MA Economics, Trinity College Cambridge; MA (Econ), Manchester University

  • 2013 to present, Chairman of the Responsible Gambling Strategy Board
  • 2010 to present, Chairman of the King’s Fund
  • 2007 to 2013, Chairman of the Committee on Standards in Public Life
  • 2005 to 2012, Chairman of the Financial Ombudsman Service
  • 2002 to 2010, Chairman of the NSPCC
  • 1997 to 2000, Permanent Secretary, Department of Health
  • 1995 to 1997, Head of the Policy Group, Department of Social Security
  • 1980 to 1995, various roles including Director of Fiscal & Monetary Policy from 1994 to 1995, HM Treasury
  • 1978 to 1980, Secretary to the Wilson Committee of Inquiry into Financial Institutions
  • 1971, Private Secretary to the Financial Secretary, HM Treasury

Terms of reference

  1. To investigate the robustness and timeliness of the Board's and the management's strategic decisions which ultimately led to the need to adopt a Capital Action Plan by the Co-operative Bank to address its £1.5bn capital shortfall;
  2. To look at the management structure and culture in which those decisions were taken; lines of accountability which governed those decisions; and the processes which led to them;
  3. To identify lessons which can be learnt to strengthen The Co-operative Bank and the wider Co-operative Group, and the co-operative business model generally;
  4. To review the financial accounting practices of the Bank, the representations made by management to the independent auditors regarding these practices and the role of the independent auditors in reporting to the Audit Committee of the Bank and giving an opinion on its financial statements;
  5. To publish the findings of its review to members, colleagues and other key stakeholders