Building a unique, mutual alternative in financial services Mutuals Forum 2009 Neville Richardson Chief Executive - Co-operative Financial Services

2 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

3 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

4 Content Our merger context Market context Our heritage Developing the strategy The future

5 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

6 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

7 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

8 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

9 Market context Lehman Brothers collapse sends shockwave round world The 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 debt The Mail, 20 Feb 2009

10 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

11 Developing the strategy ‘New Entity’ Values CFS Values Britannia Values Co-operative Group Values & Principles

12 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

13 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 to excellent communication

14 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

15 The future An exciting opportunity for a mutual alternative 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