sustainable
growth
Financial Statements 2002 Please call 0800 435 906 if you would like to receive this report in large print, Braille 
or on audio cassette. A full version of the report is also available on the website at
www.co-operativebank.co.uk contents
The Co-operative Bank p.l.c.
1
2 highlights
3 performance indicators
4 chairman’s statement
6 chief executive’s overview
14 operating and financial review
24 the board
25 directors’ report
27 corporate governance report
29 remuneration report
31 auditor’s report
32 consolidated profit and loss account
32 statement of total recognised gains and losses
33 consolidated balance sheet
34 balance sheet
35 reconciliation of movements in shareholders’ funds
36 consolidated cash flow statement
37 accounting policies
40 notes to the financial statements
66 summarised average balance sheet
67 consolidated profit and loss account history
68 consolidated balance sheet history
69 notice of annual general meeting
contents highlights
The Co-operative Bank p.l.c.
2
Profit before Taxation
Earnings attributable to Equity Shareholder (after Tax)
Operating Income
Operating Costs
Cost/Income Ratio
Charge for Bad and Doubtful Debts
As a percentage of Loans and Advances to Customers
After Tax Return on Opening Equity Shareholder’s Funds
Risk Asset Ratio:
Overall
Tier 1
Increase in Average Retail Customer Deposits
Increase in Average Retail Customer Lending
Better than 2001 by: 14.0%
Better than 2001 by: 14.2%
Better than 2001 by: 6.1%
Higher than 2001 by: 3.2%
Better than 2001 by: 1.7 percentage points
highlights
£122.5m
£78.2m
£483.4m
£290.8m
60.2%
£70.1m
1.60%
19.8%
14.1%
10.6%
12%
11% performance indicators
The Co-operative Bank p.l.c.
3
Profit before tax of £122.5 million, an increase of 14.0%. The after tax return on opening equity was 19.8%.
130
120
110
100
90
80
70
60
50
40
30
20
10
0
98 99 2000 2002
Profit Before 
Taxation (£m)
Operating Income (£m)
100
80
60
40
20
0
All Personal
Current
Account
Holders
The Co-operative
Bank p.l.c. Personal 
Current Account Holders
Customer 
Satisfaction
SOURCE:
MORI Financial
Services Survey
Six months ending
December 2002
Very Satisfied
Retail Lending Retail Deposits
500
480
460
440
420
400
380
360
340
320
300
280
260
240
220
200
180
160
140
120
100
80
60
40
20
0
performance
indicators
6000
5500
5000
4500
4000
3500
3000
2500
2000
98 99 2000 2001 2002
Average Retail Balances (£m)
100
90
80
70
60
50
40
30
Cost/Income Ratio (%)
50
45
40
35
30
25
20
15
10
5
0
Return on Equity (%)
97%
91%
28%
41%
73.6
88.6
98 99 2000
354.4
403.3
429.0
2002
483.4
2001
455.6
69%
Fairly Satisfied
98 99 2000 2001 2002 98 99 2000 2002 2001
96.3
122.5
2001
107.5
50% 4
chairman’s
statement
As The Co-operative Bank looks forward to the opportunities and challenges presented
by the creation of Co-operative Financial Services (the new grouping comprising the
bank and the Co-operative Insurance Society – CIS), it is encouraging to report that it
faces the future from a strong and confident position. This set of results represents the
ninth consecutive year of record pre-tax profits for the bank. Profit before tax was 
£122.5 million, higher than 2001 by 14%. Earnings attributable to the Co-operative Group
(CWS) Limited, after tax, were £78.2 million, an increase of 14.2%.
These impressive financial results are accompanied by an equally impressive
performance in the areas of environmental and social responsibility. This was nowhere
more clearly demonstrated than when the bank took the Special Judges’ Award in 2002
for Overall Corporate Social Responsibility Performance at the prestigious New York-
based Global Corporate Conscience Awards. Never before has a UK company, or,
indeed, a financial services organisation worldwide, received this special award.
The Global Corporate Conscience award honours companies that respect the rights and
these impressive financial results
are accompanied by an equally
impressive performance in the
areas of environmental 
and social responsibility”
‘‘ chairman’s statement
The Co-operative Bank p.l.c.
5
promote the well-being of all stakeholders, and is once again recognition of the
importance the bank attaches to measuring its success in other than purely financial
terms. The bank’s annual Partnership Report is being published alongside these financial
statements, and illustrates in detail not only how the bank delivers value to all its partners
but also how it maintains its world-class social and environmental performance.
Our internet bank, smile, launched just three years ago, continues to prosper. It has
established a distinctive character, and provides an exceptional combination of value,
convenience and service. Independent research has shown high levels of satisfaction
amongst smile’s customers; and more than 80% of smile’s customers are new to the
The Co-operative Bank group.
The bank’s record in innovation has consistently been one of its key strengths, and I am
confident that by moving forward with the Co-operative Insurance Society, under the
common leadership of Co-operative Financial Services (CFS), it will build further on its
successes over the coming years. These exciting developments will allow each of these
successful co-operative organisations to benefit from collaborative initiatives, whilst the
co-operative family of businesses should also see new opportunities arising from the
resulting synergies. At the heart of these developments, however, is the determination to
provide – for the customers of both organisations – a wider range of financial products
and convenient channels through which to access their products and services.
The scale of the changes required under the new grouping within CFS will demand a
great deal from all the people who work in both organisations. However, the commitment
and motivation already evident from the bank’s own leaders and staff confirms my belief
that 2003 should see continued progress.
There have already been a number of changes to the membership of the bank’s Board
and Executive Team. Mervyn Pedelty continues in his role as the bank’s Chief Executive,
and Sheila Macdonald has now been appointed to the role of Chief Operating Officer, 
and I would like to take this opportunity to congratulate her, and also to welcome 
Bryce Glover, Richard Goddard and Peter Sutcliffe as Executive Directors, and as 
Non-Executive Directors, Simon Butler and Graham Stow. Mick Firth and Ken Lewis have
moved on to new roles within CFS and Bob Head has left smile, and I thank them all for
their significant contribution to the bank over many years. I must also pay tribute to 
Willie Tucker and David Hollas, who both stood down from the Board during 2002 after
five year’s service as Non-Executive Directors. I am grateful to them both for their
contribution to The Co-operative Bank’s many achievements.
Graham Bennett, Chairman 6
chief 
executive’s
overview
our commitment to running a
responsive, and responsible,
business has provided a firm
foundation for success – making
2002 another record year for 
The Co-operative Bank”
‘‘
Summary Once again, our commitment to running
a responsive, and responsible, business has provided
a firm foundation for success – making 2002 another
record year for The Co-operative Bank. The year saw
us building on our strong reputation for customer focus,
ethical principles, innovative product development and
quality service. These priorities have continued to be a
powerful formula for sustainable growth.
Financial performance In 2002, the bank
produced a pre-tax profit of £122.5 million. This is a
14% increase on 2001, giving us our ninth consecutive
year of record profits. Against a backdrop of relentless
competition and increasing economic uncertainty, our
financial results continue to demonstrate that the
emphasis we place on customer service and the broad
view we take of our social responsibilities really does
deliver. The return on opening equity, after tax, was
19.8%. Operating income increased by 6.1% and the
Cost/Income Ratio was reduced again, despite our
continued investment in business development.
Average retail customer lending balances grew by 11%
and average retail customer deposit balances by 12%.
Provisions for bad and doubtful debts stood at 1.60%
of year-end loans and advances to customers, a chief executive’s overview
The Co-operative Bank p.l.c.
7
reduction in percentage terms of 0.11% compared
with 2001.
Co-operative Financial Services In
April 2002, Co-operative Financial Services (CFS) 
was created to bring The Co-operative Bank and 
Co-operative Insurance Society (CIS) under common
leadership. Co-operative Financial Services Limited is
an Industrial and Provident Society and is the new
holding company for these two major businesses.
Following my appointment as CFS’ first Chief Executive,
one of my key objectives has been to focus on the
range of products, services and distribution channels
offered to the customers of both organisations and to
explore how these can be developed to provide our
joint customer base with a more comprehensive,
convenient and co-operative financial services offering.
A significant amount of research and analysis was
undertaken prior to the formation of CFS. One output
from the research was that there is a large number of
customers unaware that these two important co-
operative businesses are part of the same family and,
as a result, are buying many of their financial services
products from outside the Co-operative Group. When
customers are made aware that the bank and CIS are,
in fact, sister organisations, many indicate a preference
for considering buying these products from the sister
organisation.
The formation of CFS has inevitably led to a
reorganisation of the bank’s Board and Executive
Team. The new management structures are now
virtually complete, including several key executive
appointments, with my colleague Sheila Macdonald
appointed to the role of Chief Operating Officer of the
bank. I continue as the bank’s Chief Executive.
People I have always firmly believed that our
people, and their commitment to exceptional levels of
customer service, are crucial to the success of the
bank. Therefore, given the various changes currently
taking place within our organisation, I am particularly
pleased by the feedback we received from our 2002
annual staff survey. The staff survey provides our
people with the opportunity to openly air their thoughts
and opinions on working for the bank. This year, I was
pleased to see a significant increase in the number of
our staff taking the opportunity to respond to the
survey and I welcome, once again, the improvement
that was recorded in the overall scores. Staff
understanding of the bank’s mission and core values
remains high, and I am delighted to report that 88%
indicated their support for this positioning. The fact
that staff opinions about working for the bank
constitute a major reason for our inclusion in the list of
the ‘UK’s Best Workplaces 2003’, published by 
the Financial Times, also gives me considerable
personal satisfaction.
In the previous year’s staff survey, along with clear
positive signals about pride, job satisfaction, teamwork
and empathy with customers, there were concerns
expressed by some staff about the opportunities for
career progression and about the increasing pressures
at work. In 2002, we continued to focus on these areas
through a number of initiatives. Our new ‘work/life
balance’ policies include provision for flexible working,
maternity, paternity and adoption leave, and childcare
vouchers. These policies recognise the wider
commitments of our staff and, in partnership with our
new ‘well-being’ policy, are a key part of our drive to
tackle the impact of modern stress in the workplace.
The impact of these new policies has yet to be seen in
responses to the staff survey, but I hope to see
improvements in this area next year as more
employees make use of these provisions.
Customer service Just as we recognise the
need to keep investing in our employees in a time of
change, it is equally important that we maintain our
sharp customer focus. Whilst I have always believed
that looking after our staff is the starting point for
excellent customer service, we also continue to We have also been particularly active in the credit card
market, regularly featuring in the media’s ‘best buy’
tables with products such as our Platinum Fixed Rate
VISA card, which guarantees a fixed rate of interest for
five years. Building on this success, in September
2002 we launched a Gold Fixed Rate card, which
provides customers with a similar fixed rate offer until
2008. We also re-launched our Platinum Advantage
card, with an initial interest-free period for purchases
and balance transfers, and also introduced a Platinum
Base Rate Tracker card, which we believe is unique in
the credit card market – cardholders are guaranteed an
interest rate that is fixed at 5% above the Bank of
England base rate, with a six month introductory
period where the rate is equivalent to the prevailing
base rate.
We continued to build relationships with our affinity
partners, notably through the introduction of a number
of new platinum cards, which generate donations to
the affinity group each time they are used by the
cardholder. In total, the bank’s affinity cards raised
more than £1.38 million for partners during 2002,
providing much needed funds for them, for a variety of
important projects.
Since last year’s launch of our new Privilege current
implement a range of initiatives to help ensure we meet
or exceed our customers’ expectations.
Our recent TV advertising was built around the
proposition that we are a bank that treats its customers
with respect, and we aim to do this in all our dealings
with them. It is extremely important to us to be honest
and open with our customers, and to guarantee them
good service. If we ever fail to live up to our service
level guarantees, after rectifying the problem we
apologise and give the customer £15.
A major independent survey, carried out by MORI in the
six months ending December 2002, confirms the
effectiveness of our approach. 97% of our current
account customers described themselves as ‘satisfied’
or ‘very satisfied’ with the service they receive from us.
This puts our net satisfaction rating 8 percentage
points above the average rating and puts us at the top
of the list of all the high street banks surveyed.
Personal banking 2002 was a particularly
busy year for product development in personal banking
as we worked hard to make sure our personal
customers have not only the choice of products, but
also the range of channels through which to access
them to meet their evolving requirements. We
expanded our residential mortgage product portfolio
with the addition of several competitive fixed-rate
offers, enabling our customers to benefit from current
low interest rates. New variable-rate mortgages,
including a 3-year discount product and a 5-year
tracker product, were added to our mortgage range
and we believe we now offer something for everyone.
In keeping with our wider values and principles, our
mortgages combine value for money with a range of
environmentally-friendly features. For example, for
each year during the lifetime of a mortgage, the bank
will make a payment to Climate Care – a scheme that
seeks to offset, each year, around a fifth of an average
home’s carbon dioxide emissions through reforestation
programmes and other schemes.
chief executive’s overview
The Co-operative Bank p.l.c.
8
For each mortgage taken out with the bank, an
annual payment is made to Climate Care to
support carbon dioxide offsetting schemes, such
as rainforest reforestation in Kibale National
Park, Uganda.
Face Foundation 2002 chief executive’s overview
The Co-operative Bank p.l.c.
9
account, we have seen many customers – both
existing and new – choosing to take advantage of the
benefits it offers. These include a guaranteed overdraft
at preferential rates, free annual family travel insurance
and discounts on a wide range of lifestyle products and
services – all for a small monthly fee.
In addition to product development, we have also
improved the way we communicate our offers to both
existing and potential new personal customers. In
2002, we ran two TV advertising campaigns: one
specifically promoting the advantages of our personal
loans, and another, to which I referred earlier,
reminding people of the bank’s promises to customers
about service, ethics and respect. All of our marketing
activity continues to carry our overarching customer
proposition: ‘The Co-operative Bank. Customer led,
ethically guided.’
Independent financial advice
Co-operative Bank Financial Advisers Ltd (CBFA), our
IFA subsidiary, consolidated its position as a leading
IFA when it was confirmed in the top 25 of the list of the
UK’s Top 100 IFAs, published by the industry trade
journal, Financial Adviser.
In our annual survey of customers, they confirmed yet
again that the three most important reasons for dealing
with CBFA are: genuinely independent advice; our
approach to ethical investments; and the reassurance
that comes from being part of The Co-operative Bank.
In 2002, CBFA became the first business in the UK to
be awarded the joint Standard Life/Royal National
Institute for the Blind (RNIB) ‘See it Right’ logo for its
accessible website.
Internet banking Within just three years of its
launch, our internet bank, smile, has established a
coveted and distinctive position in the market.
During 2002, we added a number of new services to
the smile offer. For example, working in partnership
with ‘Self Trade’, one of the UK’s fastest growing online
stockbrokers, we developed smileinvest sharedealing,
a quick and easy low-cost way for customers to buy
and sell shares, 24 hours a day, and a new smile credit
card was also launched in July 2002, offering
customers many ‘best buy’ features.
In July 2002, we were pleased to receive no fewer than
five awards for smile. The specialist magazine, Your
Money, chose smile as the Best Internet Banking
Provider and at the Guardian/Observer Consumer
Finance Awards we won four prizes for best: website,
credit card, online current account and savings
account. A successful year for smile drew to a
pleasing conclusion when a leading consumer
magazine survey singled out smile for its exceptional
levels of customer satisfaction – some 80% of
customers having said that they were very satisfied
with all aspects of their smile banking service.
For Co-operative Bank customers who want to use the
internet, but wish to do so alongside more traditional
banking service channels, the bank also provides a free
online facility, the Co-operative Bank Internet Banking
Service. Last year, this service was judged the Best
Financial Services Internet Site among the ‘traditional
banks’ at the Guardian/Observer Consumer Finance
Awards, and we have since improved the website even
further to make it even more user-friendly.
smile upheld its reputation for
innovative advertising, with a number
of campaigns appearing in the
national press throughout 2002. 10
Our Business Direct account was enhanced, rebranded and relaunched in October 2002 as
Business Directplus, offering new SME customers a range of attractive features, including 
18 months free banking. chief executive’s overview
The Co-operative Bank p.l.c.
11
Corporate and business banking
During 2002, we redefined relationship banking for our
corporate and business customers as ‘Partnership
Banking’. This move reflects the surveyed views of our
customers, who see The Co-operative Bank as an
integral part of their business and a critical component
of their success. We understand that each business is
unique and, by working in partnership, we invest time
in gaining a true understanding of our customers’ own
businesses, allowing us to tailor our support and
respond to them with imagination.
Another key element of our corporate and business
banking activities in 2002 was our focus on small to
medium-sized businesses (SMEs). In October 2002,
we relaunched our Business Direct account as
‘Business Directplus’ – a 24-hour telephone, internet
and postal banking service offering 18 months free
banking to all new SME customers, as well as competitive
in-credit interest rates on current account balances.
The year also saw the development of a new
partnership with Bradford & Bingley plc, who chose us
as their principal clearing bank. Our innovative
approach, flair and underlying values were key
amongst the factors that resulted in Bradford & Bingley
selecting The Co-operative Bank ahead of other
competitors.
An existing partnership that has strengthened and
developed over the last year is that between the
European Investment Bank (EIB) and ourselves. In
November 2001, the EIB Loan Scheme was created to
help finance the growth of businesses in EU-assisted
areas of the UK. In September 2002, we mutually lowered
the minimum loan value from £250,000 to £100,000, to
enable more of our SME customers to benefit.
At the same time, our growing profile within the Local
Authority sector placed us in a strong position to
participate in the Affordable Warmth Programme in
partnership with Transco and EIB. We developed a new
loan scheme, which is being used to assist local
authorities and social housing landlords finance the
installation of energy efficient heating systems, thus
reducing energy costs and improving comfort levels 
for residents.
The Co-operative movement Our 
co-operative heritage continues to inform and guide
everything we do – it is reflected in our strategies and
our products and services, in our community
involvement programmes and in our brand values.
2002 saw a concerted effort to strengthen the
relationship between the Co-operative movement and
the growing UK social enterprise sector. The bank
chaired a cross-movement group on these issues,
which led to a major Co-operative and social enterprise
event at the Department of Trade and Industry in
February 2002, and a meeting between Tony Blair and
key representatives from the Co-operative movement
and the social enterprise sector at 10 Downing Street.
Following the recommendations of the Co-operative
Commission, which published its findings and
recommendations in 2001, a new foundation
organisation, ‘Co-operative Action’, was launched in
April 2002. Co-operative Action has been established
to assist communities to develop co-operative, mutual
or social enterprises, through the provision of grants
and loans. The foundation has been created from
donations made by Co-operatives throughout the UK.
The bank’s Chief Executive, Mervyn Pedelty, and other leading
figures from the Co-operative movement, met with the Prime
Minister in February 2002 to discuss the role of co-operatives and
social enterprises in the UK economy. chief executive’s overview
The Co-operative Bank p.l.c.
12
The bank has been proud to take a key role in this
venture, contributing an initial £500,000 towards the
establishment of the foundation and encouraging staff
involvement in both the management team and the Board.
As part of the Co-operative family of businesses, we
continued our programme to install cash machines in
Co-operative retail stores throughout the UK. This
initiative continues to bring banking facilities into areas
that often had none and, as such, is an important part
of our continuing efforts to promote financial inclusion.
It is also an excellent example of the unique
advantages of co-operation in action.
In May 2002, this partnership brought about the launch
of the new Co-op Dividend VISA credit card. Having
revived the famous ‘Divi’ through its Dividend card, the
Co-operative Group’s retail operations can now offer
customers not only the chance to earn extra Dividend
at its own stores, but also an additional Dividend at any
outlet displaying the VISA symbol.  
Our home in the Co-operative family of businesses
allows us to explore different ways of delivering our
services to our customers. For example, we have
recently brought together the Co-operative Group’s
travel business, Travelcare, with CIS and our own
banking services in our flagship central Manchester
retail outlet at No.1 Balloon Street.
A responsible company Possibly the best
modern expression of our co-operative values is the
priority we are able to give to ethical, social and
ecological issues. Over the years, we have built a
strong reputation in these areas and our commitment
was recognised not only nationally but also globally 
in 2002. A Queen’s Award for Enterprise, in the
Sustainable Development category, was conferred on
the bank in April 2002 in recognition of our Partnership
Approach to management. Later in 2002, we were also
honoured to receive the Special Judges’ Award for
Overall Corporate Social Responsibility Performance at
the prestigious New York-based Global Corporate
Conscience Awards, effectively making us the first UK
company to be named as the world’s most socially
responsible business.
In May 2002, we marked the tenth anniversary of our
ethical stance by launching our updated policy. The
new policy is a clear statement of who we will, and will
not, do business with. Its publication followed an
extensive consultation with customers, which took
place over an 18-month period. My colleagues and I
were very pleased with the response – particularly as
the results revealed growing interest in, and support
for, our ethical policy amongst both business and
personal customers.
In our annual Partnership Report, published alongside
these financial statements, we provide much more
detailed information about our partners’ attitudes
towards our ethical policy and about our performance
against a number of other key ethical and ecological
indicators. We began producing this separate ‘warts
and all’ sustainability assessment in 1998, and we are
still the only UK retail bank to produce such an
independently verified report. In March 2003, our
Partnership Report was declared to be the Best
Sustainability Report in the UK at the Association of
Chartered Certified Accountants UK Awards for
Sustainability Reporting 2002. This followed international
recognition in 2002, when the United Nations
Environment Programme (UNEP) and SustainAbility
Our revised Ethical Policy was
published in May 2002. ranked the bank’s report as first in the biennial Global
Benchmark of Sustainability Reporting.
Our 2002 Partnership Report records the major
progress the bank has made in recent years towards
reducing its ecological impact. Almost two-thirds of 
the waste now leaving the bank is either reused or
recycled, and the carbon dioxide emissions resulting
from the electricity consumption of our buildings have
reduced by 90% per customer account since 1997 –
with 98% of the electricity we use now being sourced
from renewable sources. I am also proud to report that,
at a time when the world is losing species at an ever-
increasing rate, the bank's own initiatives on
biodiversity have resulted in the amount of land with
significantly increased biodiversity being ninety times
greater than the land occupied by the bank’s operations.
We also upheld our strong campaigning tradition in
2002 with the latest ‘Customers Who Care’ initiative,
which drew attention to the humanitarian impacts of
cluster bombs. The campaign calls for a new
international protocol on the post-conflict clearance of
unexploded weapons, including cluster bombs. In
June 2002, we welcomed the Rt Hon Clare Short MP,
Secretary of State for International Development, to the
Westminster launch of Explosive Remnants of War, a
report we produced with our campaign partners
Landmine Action (a coalition which includes many
major charities, such as Amnesty International,
Christian Aid and Oxfam). The first of its kind to
document the social and humanitarian impacts of
unexploded ordnance, the report has been
commended by the UK Government as having made a
useful and positive contribution to moving discussions
forward. The report also continues to be a key tool for
our partners as they lobby the UN to adopt a new
international agreement on explosive remnants of war
(ERW). These activities achieved a successful outcome
when, in December 2002, the UN announced that
negotiations to establish an international agreement 
on ERW would commence in 2003. The bank will
continue to support Landmine Action in 2003 as the
UN negotiations progress.
2003 and beyond Looking ahead, I am
confident that the bank’s belief in its ethical, social and
ecological responsibilities – combined with our
investments in our people, customer focus and
product innovation – will continue to serve us well.
The UK banking sector is now operating in an
environment of significantly increased competition and
greater regulation. With the economic prospects for
the UK and many other countries being currently
somewhat uncertain, I can only be cautiously optimistic
that 2003 should be another rewarding year for The
Co-operative Bank.
The recent establishment of Co-operative Financial
Services (CFS) is an important event that will help us to
bring the benefits of the Co-operative approach to an
even wider audience. As the two businesses of The
Co-operative Bank and CIS work increasingly more
closely together, the benefits of a broader range of
products, services and convenient access for our
customers should be considerable.
chief executive’s overview
The Co-operative Bank p.l.c.
13
Mervyn Pedelty, Chief Executive
Richard Lloyd of Landmine Action and Mervyn Pedelty were
joined by The Rt Hon Clare Short MP at the Westminster launch
of the research report, Explosive Remnants of War Financial Highlights In 2002, The Co-operative
Bank achieved a Profit Before Tax of £122.5 million,
£15.0 million (14.0%) higher than 2001. Earnings
attributable to the equity shareholder, after tax, were
£78.2 million, an increase of 14.2%, and the Return on
Opening Equity, after tax, was 19.8%.
The increase in profitability arose from higher operating
profits, before bad debts, reflecting a 6.1% rise in
Operating Income and a further improvement of 1.7
percentage points in the Cost/Income Ratio. Credit
quality remained stable, and the charge for bad debts,
which increased by £3.9 million, was better than last
year at 1.60% of year-end loans and advances 
to customers.
operating and financial review
The Co-operative Bank p.l.c.
14
operating
and
financial
review
Results Summary 2002 2001 Change
£m £m £m
Operating Income 483.4 455.6 27.8
Operating Costs (290.8) (281.9) (8.9)
Operating Profit (before Bad Debts) 192.6 173.7 18.9
Bad Debt Provisions (70.1) (66.2) (3.9)
Profit before Tax 122.5 107.5 15.0
Retained Profit 78.2 68.5 9.7
Cost/Income Ratio 60.2% 61.9% -1.7% The Balance Sheet remained robust throughout the
year with continued strong liquidity and capital ratios.
The year-end Risk Asset Ratio was 14.1% with a Tier 1
Ratio of 10.6%, substantially higher than the regulatory
standards. At the year end, Balance Sheet liquidity was
underpinned by £2.5 billion of highly-rated debt securities.
Business Highlights The outlook for the UK
economy is currently uncertain, with the sectoral
imbalances within the economy creating some risks to
stability. Economic growth was supported during 2002
by generally strong levels of consumer spending
alongside historically low interest rates and high house
price inflation. In contrast, the manufacturing sector
continued to have difficulties, with the result that
business investment has fallen and insolvency levels
are on the increase. With household borrowing now at
record levels, any sharp correction could depress
future economic growth. In this more uncertain
business environment, however, the bank has continued
to grow steadily whilst continuing to adopt a cautious
lending policy.
In 2002, retail customer deposit and lending balance
growth was relatively strong and balanced. Average
customer retail deposits of £5,478 million grew by
£591 million (12%) and were £1,533 million higher than
retail lending balances. Average customer retail lending
balances were £3,945 million, higher than last year by
£402 million (11%).
The growth in retail customer deposits was particularly
strong within the personal sector. Average personal
sector balances of £3,673 million were £507 million
(16%) higher than last year, including continued growth
in deposits at smile, the bank’s internet banking
operation. smile’s customer base has grown
impressively since its launch with over 80% of its
customers being new to The Co-operative Bank group.
Over the past year, smile’s product range has been
extended, and now offers many new products
including smileinvest sharedealing, a quick and easy
low-cost way for customers to buy and sell shares 24
hours a day, and a new smile credit card offering
customers many ‘best buy’ features.
The bank’s savings product range has been extended
to include fixed-rate, fixed-term deposit accounts,
including a FTSE4Good Guaranteed Stock Market
Deposit Bond and an updated range of fixed-term
deposit offers. Our added-value current account,
Privilege, launched in 2001, has proved attractive to
both new and existing customers and has also
contributed to the growth in deposits. As well as offering
full current account facilities, Privilege provides a wide
range of attractive benefits, all for a small monthly fee.
Average corporate and business deposit balances
increased by 5% to £1,805 million, reflecting steady
growth in both larger company relationship banking
and in banking for small and medium-sized enterprises
(SMEs). Business Direct, the bank’s successful
telephone and internet banking service for SMEs, was
re-launched in October 2002 as Business Directplus,
and the initial response from customers has been very
encouraging. Business Directplus enhancements
included a no-fee arranged overdraft, increased credit
interest rates and an eighteen months free banking
introductory offer. Over the last year, the banking
business of a further five Local Authorities was gained,
thus consolidating the bank’s position as a major
provider of financial services to this important sector.
The bank has also expanded its profile and business
base within the community and charity sectors, and
was delighted to be appointed banker for the newly-
formed Charity Bank.
Although the overall credit climate has been relatively
benign so far, the current uncertainties within the UK
economy could increase medium-term business and
credit risk. During the last year, the bank’s lending
growth has been carefully targeted to both maintain
credit quality and to maintain a balanced portfolio
across personal and corporate business. Lending
operating and financial review
The Co-operative Bank p.l.c.
15 increased in both the corporate and personal sectors,
with growth being stronger in the personal sector
where average lending increased by £315 million (17%)
to £2,205 million. This reflected increased demand for
the bank’s range of residential mortgages along with a
steady rise in VISA credit card balances. Average
corporate and business lending balances increased by
£87 million (5%).
The bank re-entered the UK residential mortgage market
in late 2000, and during 2001 and 2002 the product
range and delivery channels have been developed and
extended. Base Rate Tracker mortgages and a broader
range of fixed-rate, capped-rate and discount-rate
products were developed and introduced. Specialist
mortgage advisers are now in place within our branch
network and professional intermediaries are also now
in place as a key service channel as an extension to the
bank’s existing branch, direct mail, telephone, and
internet offerings.
Against a background of intense competition, VISA
credit card balances of £843 million increased by £69
million (9%) reflecting a mixture of promotional
activities and the successful launch of new products.
The Platinum VISA card, launched last year, was
expanded with the introduction of a Platinum Base
Rate Tracker card. A new Gold Fixed Rate card was
also launched during 2002. The bank’s successful
collaboration with other organisations continued and,
in 2002, new affinity card partnerships were formed
with WaterAid and Stroud & Swindon Building Society.
New VISA credit cards, with special Dividend features,
have also been introduced specifically for both food
and non-food customers of the Co-operative Group’s
extensive retail operations.
In addition to credit cards, the bank also has an
attractive range of Co-op branded savings accounts
and other services specially developed for retail
customers of the Co-operative Group and the wider
Co-operative movement. During 2002, an additional
355 cash machines (ATMs) were installed at 
Co-operative retail stores to bring the total number of
cash machines in the bank’s estate at the year end to
over 1,100. Several hundred additional cash machine
installations are also planned for 2003.
In April 2002, Co-operative Financial Services (CFS)
was created to bring The Co-operative Bank and 
Co-operative Insurance Society (CIS) under common
leadership. Co-operative Financial Services Limited is
an Industrial and Provident Society and is the new
holding company for these two major businesses. One
of the key objectives of this important development has
been to focus on the range of products, services and
operating and financial review
The Co-operative Bank p.l.c.
16
Average Balances and Interest Margins 2002 2001 Change
£m £m £m
Net Interest Income 329.6 313.5 16.1
Average Balances
Interest-earning Assets 7,755 7,175 580
Interest-bearing Liabilities 6,454 6,001 453
Interest-free Liabilities 1,301 1,174 127
Average Rates
Gross Yield on Interest-earning Assets 6.8% 7.9% (1.1%)
Cost of Interest-earning Liabilities 3.1% 4.2% 1.1%
Interest Spread 3.7% 3.7% –
Contribution of Interest-free Liabilities 0.5% 0.7% (0.2%)
Net Interest Margin 4.2% 4.4% (0.2%) distribution channels available to the customers of
both the bank and CIS, and to explore how these can
be brought closer together to provide the combined
customer base with a more comprehensive, convenient
and co-operative financial services offering. Whilst CFS
has had little impact on the bank’s results for 2002, it
has the potential to create significant opportunities for
the future.
Operating Income Operating Income of
£483.4 million was £27.8 million (6.1%) higher than last
year, reflecting growth in both Net Interest Income and
Non-Interest Income.
Net Interest Income was £329.6 million, an increase of
£16.1 million (5.1%), mainly reflecting the growth in
customer balances, partly offset by a reduction of
0.2% in the bank’s overall net interest margin. Product
margins have remained relatively stable overall and the
bank’s interest spread (the difference between interest
rates paid on deposits and that earned from loans) at
3.7% was unchanged from 2001. The contribution of
interest-free liabilities declined by 0.2% to 0.5% as a
result of the lower interest rate environment. The
bank’s overall net interest margin was 4.2% compared
with 4.4% last year.
Average interest-earning assets of £7,755 million
increased by £580 million (8.1%), reflecting growth in
retail customer lending of £402 million and an increase
in wholesale market placements of £178 million.
Average interest-bearing liabilities rose by £453 million
(7.5%) to £6,454 million, driven by growth in average
interest-bearing retail customer deposits of 
£496 million, partially offset by lower wholesale deposits.
The increase in average interest-free balances mainly
arose from higher Current Account balances and the
bank’s growing retained earnings.
Non-Interest Income of £153.8 million was 
£11.7 million higher than last year, an increase of 
8.2%. Net commission and fee income increased 
by £12.4 million, mainly reflecting higher inter-bank
commission from the bank’s expanded ATM (cash
operating and financial review
The Co-operative Bank p.l.c.
17
Non-Interest Income 2002 2001 Change
£m £m £m
Net Commission and Fee Income 109.6 97.2 12.4
Insurance Commission Income 43.6 43.2 0.4
Other Income, including Dealing Profits/Losses 0.6 1.7 (1.1)
Total 153.8 142.1 11.7
Operating Cost Analysis 2002 2001 Change
£m £m £m
Staff Costs
Wages and Salaries 93.3 88.9 4.4
Pensions and Social Security Costs 21.4 19.5 1.9
Other Staff Costs 7.3 7.9 (0.6)
122.0 116.3 5.7
Other Administrative Expenses 148.7 143.5 5.2
Depreciation 20.1 22.1 (2.0)
Total Operating Costs 290.8 281.9 8.9
Cost/Income Ratio 60.2% 61.9% -1.7% Mervyn Pedelty
Chief Executive
Sheila Macdonald
Chief Operating Officer
executive 
committee
Bryce Glover
Executive Director,
Corporate and 
Business Banking
Peter Sutcliffe
Executive Director,
Retail Banking and
Business Management
Richard Goddard
Executive Director,
Finance and Risk
Shelagh Everett
Director of Strategic
and Business Projects
Caroline Hendra
Director of Credit Risk
Management
Phil Garlick
Director of Operations,
smile
Patrick Walsh
Director of 
Retail Network 
and Operations
18 operating and financial review
The Co-operative Bank p.l.c.
19
machine) network together with higher VISA
commission, mortgage arrangement fees and
customer service fees.
Insurance commission income was higher than last
year by £0.4 million. Other income was £1.1 million
lower than in 2001 due to lower dealing income and
wholesale commission. Most of the bank’s income
from Treasury activities is included in Net Interest
Income.
Operating Costs Operating Costs of 
£290.8 million were £8.9 million higher than last year, 
a rise of 3.2%. The increase in costs arose mainly 
from additional business development expenditure 
and higher staff costs. The bank’s Cost/Income Ratio
improved to 60.2%, better than last year by 
1.7 percentage points.
Staff costs were £5.7 million (4.9%) higher than last
year, mainly reflecting the annual pay award, higher
pension contributions and business growth. Staff
numbers increased due to planned expansion in the
smile and mortgage customer service centres.
Other Administrative Expenses and Depreciation costs
increased by £3.2 million (1.9%), reflecting incremental
expenditure on strategic business developments such
as the expanded ATM (cash machine) network and
investment in new technology. Major IT projects in
2002 included initial work on re-designing the
underlying technical infrastructure of our banking
systems, development of the bank’s payment systems
in response to industry initiatives, and the development
Bad and Doubtful Debt Charge 2002 2001 Change
£m £m £m
Profit and Loss Charge
Personal Sector 61.6 61.1 0.5
Corporate Sector 8.5 5.1 3.4
Total 70.1 66.2 3.9
Charge as a percentage of year end
Loans and Advances to Customers 1.60% 1.71% -0.11%
of sophisticated risk management systems. Excluding
this additional investment spending, other Administrative
Expenses were lower than last year.
Bad and Doubtful Debts The Profit and
Loss Account Charge for bad debts of £70.1 million
was £3.9 million higher than last year, mainly due to
higher corporate and business sector provisions. The
bad debt charge represented 1.60% of year-end Loans
and Advances to Customers, an improvement of
0.11% over 2001.
The credit quality of the personal portfolio remained
stable and personal sector bad debt charges
increased by only £0.5 million (0.8%). The bank’s credit
acceptance criteria have been progressively tightened
over the last three years and the bad debt charge
increased at a slower rate than the growth in customer
balances.
The bank’s corporate and business lending is largely to
small and medium-sized business enterprises (SMEs)
and credit quality has remained stable with relatively
low bad debt charges in recent years. This partly
reflects the write-back of prior year provisions following
the realisation of previous problem loans. In response
to a more uncertain economic outlook, the bank’s
credit approval standards have become more
conservative, with more stringent standards applied
related to the quality of security and a customer’s
ability to generate positive cash flow during an
economic downturn. In addition, the management of
potentially higher-risk lending sectors has been strengthened. Increased provisions have been raised
against a small number of accounts within these
sectors to reflect this higher risk exposure. As a result,
corporate sector bad debt charges were £8.5 million,
higher than in 2001 by £3.4 million. The bad debt
charge in the year, as a percentage of average
balances, was 0.5%, compared to 0.3% last year.
Summary In 2002, the bank continued to grow
both its balance sheet and profits despite increased
competition. Cost efficiency has improved and an
excellent return on capital has been generated. The
creation of Co-operative Financial Services (CFS) in
2002, bringing together the bank and the Co-operative
Insurance Society under common leadership, is clearly
an important and positive development. Whilst CFS
has had little impact on the bank’s results for 2002, it
has the potential to create significant opportunities for
the future. In an intensely competitive and changing UK
retail financial services market, the bank continues to
be well placed to compete, and should be even
stronger under the auspices of CFS.
operating and financial review
The Co-operative Bank p.l.c.
20 operating and financial review
The Co-operative Bank p.l.c.
21
Risk Management The Board is responsible
for approving the bank group’s strategy, its principal
markets and the level of acceptable risks. The
significant risks arise in four broad categories: credit
risk, market risk, liquidity risk and operational risk. The
Board has established Board Committees and
Executive Management Committees to administer a
risk management process which identifies the key risks
facing the business and reviews reports submitted to
those Committees on how those risks are being
managed. Specific authority has been delegated to
Board Committees and the Chief Executive who may,
in turn, delegate elements of his discretions to
appropriate Executive Directors and their senior 
line managers.
The bank’s Executive Risk Review Committee,
comprising all Executive Directors, the Chief Executive
and Chief Operating Officer has continued to meet in
2002. The Terms of Reference include the maintenance
of the Risk Management Policy, the identification and
evaluation of risks and the provision of assurance to
Board and Audit and Risk Committees. Regular risk
and control assessments are provided by line
management to the Risk Committee in respect of the
bank’s significant risks.
Credit Risk arises from the possibility of
customers and counterparties failing to meet their
obligations to the bank and represents the most
significant category of risk.
The Advances Policy Statement is approved by the
Board annually and determines the criteria for the
management of personal, corporate and wholesale
market exposures. It specifies credit management
standards, including country, sector and counterparty
limits, along with delegated authorities. Larger
corporate facilities are sanctioned by the Board’s
Advances Committee who also review, each month,
facilities granted within the Chief Executive’s discretion.
He exercises his discretion within the forum of the
Credit Committee which comprises another Executive
Director and senior credit managers.
The Group’s personal lending policy is to establish
credit criteria which determine the optimum balance
between volume growth (generating higher income)
and higher bad debts, so as to maximise overall
profitability. Personal lending is tightly controlled
through advanced credit and behavioural scoring
techniques administered by a specialist department.
The Board receive regular reports on the performance
of the portfolio.
The Group’s corporate sector policy is to maintain a
broad sectoral spread of exposures which reflect the
Group’s areas of expertise. Credit exposures to
corporate and business banking customers are
assessed individually. The quality of the overall portfolio
is monitored, using a credit grading system calibrated
to the probability of incurring losses. All aspects of
credit management are controlled centrally. The Board
receives regular reports on new facilities and changes
in facilities, sector exposures, bad debt provisions and
the realisation of problem loans.
Credit policy for wholesale market counterparties
involves establishing limits for each of these
counterparties based on their financial strength 
risk management 22
operating and financial review
The Co-operative Bank p.l.c.
and credit rating. Counterparty limits are largely
uncommitted. All counterparties are reviewed at least
annually by the Treasury Credit Department and the
counterparty list is also reviewed by the Board’s
Advances Committee.
Market Risk arises from the effect of changes in
market prices of financial instruments, on income
derived from the structure of the balance sheet,
execution of customer and inter-bank business and
proprietary trading. The majority of the risk arises from
changes in interest rates as the bank does not trade in
equities or commodities and has limited foreign
currency activity.
Interest Rate Risk Policy Statements, approved by
the Audit and Risk Committee on behalf of the Board,
specify the scope of the bank’s wholesale market
activity, market risk limits and delegated authorities.
The policy is executed by the bank’s Asset and Liability
Committee (ALCO) which is chaired by the Chief
Executive and meets monthly. Its prime task is to
assess the interest rate risk inherent in the maturity and
re-pricing characteristics of the Group’s assets and
liabilities. It sets limits within which Treasury and the
bank’s Asset and Liability Management department
manage the effect of interest rate changes on the
bank’s overall net interest income. The principal
analytical techniques involve assessing the impact of
different interest rate scenarios and changes in
balances over various time periods.
Treasury executes funding and hedging transactions
with the wholesale markets on behalf of the bank and
its customers. It also generates incremental income
from proprietary trading within strict risk limits. There
are two prime measures of risk supplemented by
additional controls such as maturity and stop loss
limits. Risk units express the various re-pricing and
maturity mismatches as a common unit of
measurement. Value at Risk (VaR) measures the daily
maximum potential gain or loss due to recent market
volatility to a statistical confidence level of 95% and
uses 250 days of historical data and a one day holding
period. During 2002, the daily VaR in the trading
portfolios was less than £1.3 million. The VaR
methodology has inherent limitations in that market
volatility in the past may not be a reliable predictor of
the future, and may not reflect the time required to
hedge or dispose of the position, hence VaR is not
used by the bank as the sole measure of risk.
The Board receive quarterly reports on the
management of Balance Sheet risk and, each month,
ALCO reviews the Balance Sheet risk position and the
utilisation of wholesale market risk limits.
Liquidity Risk arises from the timing of
cashflows arising from the Group’s assets, liabilities
and off-balance sheet instruments. Treasury manages
the Group’s liquidity within guidelines laid down by
ALCO and in accordance with standards established
for all banks by banking regulators. Short-term liquidity
standards ensure the Group can always meet its
obligations without recourse to the wholesale markets
for at least the next five working days.
The Group’s liquidity management policies are
reviewed and approved annually by the Audit and Risk
Committee and reviewed monthly by ALCO.
Operational Risk arises from the potential for
key system failures, breaches in internal controls or
from external events resulting in financial loss or
reputational damage. Key operational risks include
outsourced contracts, payment systems and
information systems.
Operational risk is controlled and mitigated through
comprehensive, ongoing risk management practices
which include formal internal control procedures,
training, segregation of duties, delegated authorities
and contingency planning. Internal Audit Department
conduct a programme of operational reviews and
report regularly to Executive Directors and to the 
Audit and Risk Committee. 23
operating and financial review
The Co-operative Bank p.l.c.
The Executive Directors are responsible for controlling
the operating risks within their direct areas of
accountability and for compliance with Group policies,
which are extensively documented in Procedures
Manuals.
Financial Instruments The use of Financial
Instruments is essential to the Group’s business
activities and financial instruments constitute a significant
proportion of the Group’s assets and liabilities. Risk
management procedures are described earlier in this
report, and analysis of the financial instruments is
provided in the Notes to the Financial Statements. The
main financial instruments used by the Group, and the
purposes for which they are held, is outlined below:
Customer Loans and Deposits The provision of
banking facilities to customers is the prime activity of
the Group and customer loans and deposits are major
constituents of the balance sheet. The Group has
detailed policies and procedures to manage risks.
Much of the lending to corporate and business banking
customers is secured.
Debt Securities, Wholesale Market Loans and
Deposits Wholesale market loans and deposits are
used to fund customer balances and manage interest
rate risk. The Group issues medium-term notes within
an established Euro Medium Term Note programme
and also issues Certificates of Deposit as part of its
normal Treasury activities. Overall, customer deposits
exceed loan balances and these excess funds, along
with the Group’s capital, are substantially invested in
marketable, investment grade, debt securities and
short-term wholesale market placements. Debt
securities also underpin the Group’s liquidity
requirements and generate incremental net interest
and trading income.
Capital Funds – Subordinated Note Issues and
Preference Shares The Group has a policy of
maintaining prudent capital ratios and utilises a broad
spread of capital funds. In addition to ordinary share
capital and retained earnings, the Group has issued
£60 million Preference shares and, when appropriate,
also issues perpetual and fixed term Subordinated
Notes.
Foreign Exchange The Group undertakes foreign
exchange dealing to facilitate customer requirements
and to generate incremental income from short-term
trading in the major currencies. Structured risk and
trading related risk are managed formally within
position limits approved by the Board.
Derivatives A derivative is an off-balance sheet
financial instrument that derives its value from an
underlying rate or price such as interest rates,
exchange rates and other market prices. Derivatives
are an efficient means of managing market risk and
limiting counterparty exposure. The bank uses them
mainly for hedging purposes and to meet the needs 
of customers.
The most frequently used derivative contracts are
interest rate swaps, exchange traded futures and
options, caps and floors, forward rate agreements,
currency swaps and forward currency transactions.
Terms and conditions are determined by using
standard industry documentation. Derivatives are
subject to the same market and credit risk control
procedures as are applied to other wholesale market
instruments and are aggregated with other exposures
to monitor total counterparty exposure which is
managed within approved limits for each counterparty. Non-Executive Chairman
G. R. Bennett, FIMgt 
Non-Executive Deputy Chairman
M. D. Beaumont, MA, FCA
Chief Executive
M. K. Pedelty, FCA, FCIB
Chief Operating Officer
S. P. B. Macdonald
Executive Directors
B. P. Glover, ACIB, LLB(Hons) R. T. Goddard, MA, FCA
W. J. Marper, FCA P. J. Sutcliffe, ACIB
Non-Executive Directors
C. B. Blanchett S. J. Butler K. W. Darwin, OBE, BA(Hons)
D. J. Jackson, FCA Sir Graham Melmoth, FCIS, FIGD, CIMgt K. A. Smith
G. H. Stow, FCIB, FCIPD
Secretary
M. A. Lees, FCIS
The Co-operative Bank p.l.c.
Registered in England No. 990937
Head Office and Registered Ofﬁce
1 Balloon Street, Manchester M60 4EP.
Telephone: 0161-832 3456. Fax: 0161-829 4475.
Web site address: www.co-operativebank.co.uk
the board
24
the board
The Co-operative Bank p.l.c. directors’ report
The Co-operative Bank p.l.c.
25
The Directors submit their report, together with the audited financial statements for the year ended 11th January 2003.
Results and Dividends
The profit on ordinary activities before taxation was £122.5 million (2001–£107.5 million), an increase of £15.0 million on 2001. After preference
dividends of £5.5 million, the profit attributable to the ordinary shareholders amounted to £78.2 million. The Directors do not recommend the
payment of a dividend on the ordinary shares.
Activities and Business Review
The bank and its subsidiary undertakings forming The Co-operative Bank Group provide an extensive range of banking and financial services in the
United Kingdom.
The operating and financial review sets out the business of the Group for the year ended 11th January 2003 and future developments.
Outlets
At 11th January 2003 the bank had 133 outlets and 119 Handybanks (instore facilities).
Directors and their Interests
The names of the present members of the Board are set out on page 24.
Mr. M. J. Woodward also served as an Executive Director until his resignation on 1st February 2002.
Mr. D. S. Hollas also served as a Non-executive Director until his resignation on 8th November 2002.
Mr. K. J. Lewis and Mr. M. A. Firth also served as Executive Directors until their resignations on 12th November 2002.
Mr. W. Tucker also served as a Non-executive Director until his resignation on 4th December 2002.
Mr. R. T. Goddard was appointed Executive Director on 8th November 2002.
Mr. P. J. Sutcliffe and Mr. B. P. Glover were appointed Executive Directors on 10th January 2003.
Mr. S. J. Butler was appointed as a Non-executive Director on 28th January 2003.
Mr. G. H. Stow was appointed as a Non-executive Director on 4th March 2003.
In accordance with the Articles of Association, Messrs. Butler, Goddard, Sutcliffe, Glover and Stow, having been appointed since the date of the
last Annual General Meeting, retire and being eligible, offer themselves for re-election.
In accordance with the Articles of Association, Messrs. Marper, Darwin and Bennett retire by rotation and, being eligible, offer themselves for 
re-election.
No Director offering themself for re-election has a service contract with the bank or any of its subsidiary undertakings which has a duration of more
than one year. 
No director had a material interest at any time during the year in any contract of significance, other than a service contract, with the bank or any of
its subsidiary undertakings.
As nominee of the ultimate parent organisation, Mr. G.R. Bennett held 40 ordinary shares of 5p each throughout the year. These were transferred
to the ultimate parent organisation on 21st March 2003.
The Directors’ interests in the bank’s 9.25% £1 preference shares were as follows:
No. of Shares
2002 2001
W. J. Marper 11,042 11,042
No other Director had a beneficial interest in any shares in the Group or in Co-operative Group (CWS) Limited which is the ultimate holding
organisation, or in any other companies controlled by Co-operative Group (CWS) Limited, apart from the following interests in Unity Trust Bank p.l.c.
2002 2001
‘C’ Shares ‘C’ Shares
of £1 each of £1 each
Sir Graham Melmoth 226 226
There have been no changes in the Directors’ shareholdings between the end of the financial year and 10th April 2003, except as stated above.
Non-executive Directors
The Non-executive Directors are appointed from the Board and Executive of Co-operative Financial Services Limited, which is the holder of all the
ordinary share capital except for the 40 ordinary shares held by the ultimate holding organisation as described above, as follows:
Martin Beaumont, 53, Chief Executive, Co-operative Group (CWS) Limited.
Graham Bennett, 52, Chief Executive, Southern Co-operatives Limited.
Christopher Blanchett, 56, Chief Executive, Colchester and East Essex Co-operative Society Limited.
Simon Butler, 48, Chairman, Co-operative Insurance Society Limited.
Keith Darwin, 58, Chairman, Co-operative Financial Services Limited.
David Jackson, 55, Chief Financial Officer, Co-operative Group (CWS) Limited.
Sir Graham Melmoth, 65, Non-executive Director, Co-operative Financial Services Limited.
Kathryn Smith, 43, Research and Communications Consultant.
Graham Harold Stow, 58, Chairman of Building Societies Association. 26
directors’ report
The Co-operative Bank p.l.c.
Supplier Payment Policy and Practice
The bank’s suppliers are one of seven groups recognised by the bank as partners in its business. Each partner has clear responsibilities to the bank
and the bank in turn acknowledges its responsibilities to them. The bank considers that the prompt payment of invoices is one of its responsibilities
to its suppliers and is a signatory to the Better Payment Practice Code. Signatories to the code promise to agree payment terms at the outset of a
relationship, explain their payment procedures to suppliers, pay bills in accordance with any contract agreed with the supplier or as required by law,
tell suppliers without delay when an invoice is contested and settle disputes quickly. Bank policy on supplier payment is compliant with the
provisions of the Late Payment Act which became effective in August 2002. The bank had 29 days (2001–19 days) purchases outstanding at 
11th January 2003, based on the average daily amount invoiced by suppliers during the financial year. 
Staff
The bank and its subsidiary undertakings employed 4,247 persons at 11th January 2003 (2001–4,057). The weekly average number of persons
was 4,161 (2001–4,067) and their aggregate remuneration for the year was £93.3 million (2001–£88.9 million).
The bank is currently introducing new training and development initiatives across the organisation as part of a continuous improvement programme
supporting the new approach to performance management.
The bank continues to consult and communicate with staff on business performance issues, using staff publications, surveys, conferences, videos,
the Staff Council and forums with UNIFI who continue to be fully involved where organisational change affects staff.
The bank was once again named by The Sunday Times as one of the “Best Companies to Work For” in an independent survey of employment
policies and working conditions of leading British organisations which was supported by the Department of Trade and Industry and Learndirect.
Most importantly this survey took the views of staff as the key element in judging performance. This approach reinforces our values and Brand and
is key to the operation of our Corporate Responsibility policies and practices. 
Employees with Disabilities
The bank is a member of the Employers’ Forum on Disability, which provides advice and guidance on the employment of people with disabilities.
The bank is a holder of the ‘Positive about Disabled People’ symbol, a recognition given by Jobcentre Plus to employers who have agreed to meet
five commitments regarding the recruitment, employment, retention and career development of disabled people. The bank’s policy is to consider
carefully employment applications from people with disabilities, matching vacancies with an individual’s particular aptitudes and abilities. The bank
recognises its responsibility for making ‘reasonable adjustments’ for new staff with disabilities and for those individuals who develop disabilities
whilst in employment. Our approach to disability policy is defined by a committee of Senior Managers across the bank, led by a Director.
Donations
During the year, the bank and its subsidiaries made donations (which excludes affinity card payments) of £1.1 million (2001–£0.7 million) to United
Kingdom charitable organisations.
It is the bank’s policy that no donations are made for political purposes. The Mission Statement declares that the bank and its subsidiaries are 
non-partisan in all social, political, racial and religious matters.
Directors’ Responsibilities in respect of the financial statements
Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of
the bank and of the Group and of the profit or loss for that period. In preparing those financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the
financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The Directors are responsible for maintaining proper accounting records which disclose, with reasonable accuracy at any time, the financial position
of the bank and to enable them to ensure that the financial statements comply with the Companies Act 1985. They have general responsibility for
taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Auditor
In accordance with Section 385 of the Companies Act 1985, a resolution for the re-appointment of KPMG Audit Plc as auditor of the bank and a
resolution to authorise the Directors to fix their remuneration are to be proposed at the next Annual General Meeting.
By Order of the Board
M. A. Lees, Secretary
10th April 2003 27
corporate governance report
The Co-operative Bank p.l.c.
The Combined Code
The Combined Code of Corporate Governance, which is incorporated into the Listing Rules of the Financial Services Authority, incorporates the
recommendations of the Hampel Committee. The Turnbull Committee provided guidance in September 1999 on Directors’ responsibilities for
internal control. The Directors believe the bank group has procedures necessary to comply with the Turnbull Guidance. With the exception of the
areas of Non-compliance noted below, the bank has complied with the Combined Code.
Directors
The business of the bank is controlled by the Board of Directors. The Board has met eleven times in 2002. The Board includes a Non-executive
Chairman, eight Non-executive Directors, one of whom is designated Deputy Chairman, four Executive Directors, the Chief Executive and Chief
Operating Officer.
A Board agenda and relevant supporting papers are distributed to Board members in advance of the Board meeting.
A number of external consultants provide professional advice to the Boards of the constituent parts of the wider Co-operative Group. This will be
co-ordinated through a Group Secretariat.
The Company Secretary is professionally qualified and is available for advice to all members of the Board. The appointment and removal of the
Company Secretary requires the approval of the Board.
A three level programme of external training has been developed for existing and potential Non-executive Directors. Level one was delivered in the
first quarter of 2003. This was in addition to a skills assessment in 2002 by external consultants in respect of all directors serving on the Board of
Co-operative Group (CWS) Limited.
In accordance with the Articles of Association, one third of the Directors (excluding the Chief Executive) retire from office at the Annual General
Meeting. The Directors selected to retire are those longest in office since their last appointment. A retiring Director is eligible for re-appointment.
Vacancies are filled by resolution at the Annual General Meeting. Directors appointed since the date of the last Annual General Meeting also retire
in accordance with the Articles of Association.
Areas of Non-compliance
Whilst the absence of strict independence of the majority of Non-executive Directors means that the bank has not fully complied with the
requirements of the code, the Audit and Risk Committee and Remuneration and Appointments Committee are composed of Non-executive
Directors. Graham Stow was appointed on 4th March 2003 as an independent Non-executive Director. The bank has not appointed a senior 
Non-executive Director.
Directors’ Remuneration
The Remuneration Report sets out the policies, procedures and details relating to Directors' remuneration. The names of the members of the
Remuneration and Appointments Committee are shown at the end of this report.
Relations with Shareholders
The bank has two equity shareholders. The majority of shares are held by Co-operative Financial Services Limited, which is a wholly-owned
subsidiary of the Co-operative Group (CWS) Limited. The remainder of shares are held by Co-operative Group (CWS) Limited. Co-operative
Financial Services Limited provides the Chairman, Deputy Chairman and seven other Non-executive Directors. The bank has approximately 2,500
preference shareholders. The preference shares are fixed interest shares and are non-cumulative and irredeemable. The preference shareholders
are entitled to attend the Annual General Meeting, but the shares only carry speaking or voting rights if and when the dividend has been in arrears
for six months or more, or if a resolution is to be proposed at the Annual General Meeting abrogating or varying any of their respective rights or
privileges, or for the winding-up of the bank or other return of capital and then only on such resolution.
Accountability and Audit
The Directors’ responsibilities for the preparation of the financial statements are set out in the Directors' Report.
The Audit and Risk Committee consists of four Non-executive Directors. The Committee meets at least three times a year with the Head of Internal
Audit and the external auditors. Executive Directors and Senior Managers may attend to brief the Committee on specific issues. Other meetings
will be arranged if circumstances suggest that a meeting is required. Close contact is maintained between the internal and external auditors.
Internal Control
The Board is ultimately responsible for the bank’s systems of internal control and for reviewing their effectiveness. Responsibility for individual areas
of control has been allocated to nominated managers under the Financial Services Authority’s (FSA) senior management responsibilities regime.
Such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and can provide only reasonable but
not absolute assurance against material mis-statement or loss.
The Board confirms there is a process for identifying, evaluating and managing the significant risks faced by the bank. The process has been in
place throughout the whole of 2002 and up to the date of approval of the Annual Report and Accounts, is regularly reviewed by the Board and
accords with the Turnbull Guidance.
The process used by the Board to review the effectiveness of the systems of internal control includes the following:
• Reviewing the external and internal audit work plans.
• Considering reports from management, internal and external audit, on the systems of internal control and any material control weaknesses.
• Discussing with management the actions taken on problem areas. 28
• The Audit and Risk Committee reviews the effectiveness of the risk management process and significant risk issues are referred to the Board
for consideration.
• The Chairman of the Audit and Risk Committee reports the outcome of Audit and Risk Committee meetings to the Board and the Board receives
minutes of all Audit and Risk Committee meetings.
The main features of the risk and control framework are outlined below:
Risk Management – The Board is responsible for approving the bank’s strategy, its principal markets and the level of acceptable risk. It has
established Board Committees and Executive Management Committees to administer a risk management process which identifies the key risks
facing the business and ensures they are managed effectively. Details of the bank’s Risk Management policy and procedures are provided on pages
21 to 23.
Control Environment – The Board has established an organisational structure with clearly-defined lines of responsibility and delegation of authority
to appropriately qualified management. Policies and procedures are well documented and communicated throughout the organisation.
Human resource policies, including those related to recruitment and training, maintain standards of competency and integrity.
Information and Communication – The bank has comprehensive systems of strategic planning and financial reporting. Three year strategic plans
and annual budgets are approved annually by the Board. Strategic business initiatives and investment spending plans are also individually approved
by the Board. Actual results compared to budget and prior periods are viewed by the Board at each of their meetings. A consistent and detailed
financial reporting system underpins effective management by Executive Directors and their line managers.
Control Activities – Comprehensive policy statements and internal control procedures have been tailored to the requirements of individual
business activities. Rigorous controls in areas of significant risks include clear parameters for delegation of authority, segregation of duties, regular
reporting and review.
Monitoring Systems – The operation of the system of internal control is the responsibility of line management. It is subject to independent review
by Internal Audit and, where appropriate, by the bank's external auditors and external regulators. The reports of all of these bodies on internal
control are reviewed by the Audit and Risk Committee on behalf of the Board. The Audit and Risk Committee ensures that, where necessary,
appropriate corrective action is taken.
The Head of Internal Audit reports directly to the Audit and Risk Committee and along with the external auditors provides additional advice and
information to the Committee.
During the year, regular assessments of the bank’s significant risks and related controls have been submitted by line management to the Executive
Directors’ Risk Review Committee and to the Audit and Risk Committee.
The Audit and Risk Committee, on behalf of the Board, has reviewed the effectiveness of the bank’s systems of internal control for the year and up
to the date of approval of the annual report and accounts. As might be expected in a group of this size and complexity, a small number of internal
control irregularities occurred during the period under review. These were identified on a timely basis and appropriate actions taken. None of these
irregularities in internal control resulted in any material losses which require disclosure.
Going Concern
The financial statements have been prepared on the going concern basis as the Directors are satisfied that the Group has the resources to continue
in business for the foreseeable future.
Directors’ Committees
Audit and Risk Committee Advances Committee
M. D. Beaumont (resigned 3rd September 2002) M. D. Beaumont (resigned 3rd September 2002)
C. B. Blanchett (resigned 4th March 2003) G. R. Bennett *
D. J. Jackson * C. B. Blanchett (resigned 4th March 2003)
Sir Graham Melmoth (appointed 3rd September 2002) D.J. Jackson
K. A. Smith W. J. Marper
G. H. Stow (appointed 4th March 2003) Sir Graham Melmoth (appointed 3rd September 2002)
M. K. Pedelty
G. H. Stow (appointed 4th March 2003)
Remuneration and Appointments Committee Executive Directors’ Risk Review Committee
M. D. Beaumont M. A. Firth (resigned 12th November 2002)
G. R. Bennett * B. P. Glover (appointed 10th January 2003)
C. B. Blanchett R. T. Goddard (appointed 8th November 2002)
(appointed 3rd September 2002, resigned 4th March 2003) K. J. Lewis (resigned 12th November 2002)
S. J. Butler (appointed 4th March 2003) S. P. B. Macdonald
K. W. Darwin W. J. Marper
Sir Graham Melmoth (resigned 3rd September 2002) M. K. Pedelty *
P. J. Sutcliffe (appointed 10th January 2003)
* Chairman
corporate governance report
The Co-operative Bank p.l.c. 29
Non-Executive Directors
The Chairman, Deputy Chairman and the other Non-executive Directors received no remuneration and have no pension arrangements, incentive
schemes or share option arrangements. An amount of £10,693 was paid to Co-operative Group (CWS) Limited in respect of the provision of the
services of a Non-executive Director.
The only Non-executive Director who has a contract is the independent professional Non-executive Director Graham Stow who has a three year
contract with the Co-operative Group (CWS) Limited for services to its Financial Services subsidiaries for £30,000 per annum with effect from 4th
March 2003.
Executive Directors
Basic salaries and benefits
Remuneration and benefit entitlements of Executive Directors are determined on behalf of the Board by the Remuneration and Appointments
Committee which consists of the Chairman and three other Non-executive Directors. They take advice from independent external consultants as
appropriate and consider the remuneration of comparable positions in the financial services sector.
Service contracts
All existing Executive Directors are employed under service contracts which provide for periods of notice or termination of twelve months or less.
Pension scheme
All Executive Directors are members of The Co-operative Bank Pension Scheme which is a defined benefit arrangement providing benefits based
on final pensionable pay related to length of service. Normal retirement age is 60 and the scheme provides a pension of two thirds of pensionable
pay at normal retiring age after completion of 40 years of pensionable service.
The scheme is non-contributory and the bank currently contributes 15.6% of pensionable pay into the pension scheme.
Special contributions of 10% of salary were paid for K.J. Lewis, W.J. Marper and S.P.B. Macdonald. 
Action has been taken to enhance benefits for M.K. Pedelty and M.A. Firth.
M. J. Woodward retired from the bank on 1st February 2002 and enhanced pension arrangements were revised in the light of his early retirement.
Incentive schemes
Executive Directors participate in two incentive schemes. One is related to the bank’s annual return on shareholder’s funds, and the other to actual
growth in shareholder’s funds during a fixed three year period from January 2000 to January 2003. There are various incentive schemes for senior
managers and other specialist staff. All other eligible staff receive a pro-rata share of 5% of pre-tax profits.
The Executive Directors’ annual incentive scheme is related to the bank’s return on shareholder’s funds in excess of a threshold return, in each year.
The maximum potential bonus in any year is 50% of each Director’s salary. The medium term incentive scheme enables Executive Directors to
receive a bonus, calibrated to the compound annual growth in shareholder’s funds during a fixed three year period. The maximum bonus payment
under this scheme is 100% of each Director’s salary, payable at the end of the three year period. Earnings arising from this scheme have been
determined at the end of the 2002 financial year. The Chief Executive participates in both incentive schemes and receives 1.2 times the payment
to individual Executive Directors.
The payments for the annual incentive scheme in respect of the year 2002 and for the Medium Term Incentive Scheme 2000 to 2002 are reflected
in the table overleaf within ‘Performance Related Pay’.
Executive Directors appointed during the year participated in the incentive scheme for senior managers. They will participate in the Executive
Directors’ incentive schemes from 12th January 2003.
remuneration report
The Co-operative Bank p.l.c. Directors’ Emoluments
Increase in
Basic Benefits Performance Total Accrued Accrued Transfer 2001 Total
Pay in Kind Related Pay Emoluments Pension Pension Value (vii) Emoluments
£££££££ £
M. K. Pedelty (i) 193,803 8,437 412,973 615,213 81,467 30,042 342,560 525,227
S. P. B. Macdonald 192,000 17,439 209,717 419,156 80,392 18,207 230,623 224,030
M. A. Firth (ii) 172,904 5,090 230,419 408,413 81,706 17,013 218,168 277,099
B. P. Glover (iii) 516 – 88 604 22,330 – – –
R. T. Goddard (iv) 19,160 – 3,058 22,218 12,477 1,535 10,856 –
K. J. Lewis (ii) 131,923 14,244 176,199 322,366 63,768 10,826 131,354 231,477
W. J. Marper 168,115 12,714 216,423 397,252 62,057 10,311 131,894 276,523
P. J. Sutcliffe (iii) 512 – 91 603 56,145 – – –
M. J. Woodward (v) 31,154 1,231 99,974 132,359 104,757 189 3,455 260,991
910,087 59,155 1,348,942 2,318,184 565,099 88,123 1,068,910 1,795,347
Compensation for
loss of office (v) 30,138 – – 30,138 – – – –
Sums paid to
third parties (vi) 10,693 – – 10,693 – – – 10,693
Former directors
who served
during 2001 – – – –––– 182,635
950,918 59,155 1,348,942 2,359,015 565,099 88,123 1,068,910 1,988,675
(i) Highest Paid Director
(ii) Resigned from the Board on 12th November 2002. The emoluments in 2002 relate to the period prior to their resignation.
(iii) Appointed to the Board on 10th January 2003. The emoluments in 2002 relate to the period subsequent to their appointment.
(iv) Appointed to the Board on 8th November 2002. The emoluments in 2002 relate to the period subsequent to his appointment.
(v) Mr M. J. Woodward retired on 1st February 2002. He has waived £82,784 of his entitlement to performance related pay due to him under the
Executive Directors’ Medium term incentive scheme. He received £30,138 as compensation payment being the market value of his company
car which he received on resignation.
(vi) Paid to Co-operative Group (CWS) Limited for the provision of the services of a Non-executive Director.
(vii)Transfer value represents the transfer value of the increase in accrued pension.
Total emoluments represents apportioned basic pay, benefits in kind and performance related pay, in respect of services as a director of The 
Co-operative Bank p.l.c. They exclude emoluments paid by the bank and recharged to a fellow subsidiary in respect of services as a director or
senior manager of Co-operative Financial Services Limited and Co-operative Insurance Society Limited.
Share options
The bank does not operate a share option scheme.
Appointments outside the bank
Executive Directors can accept appointments from sources outside the Co-operative Financial Services Group, with the consent of the Board,
which will be forthcoming if it considers the appointment beneficial to the interests of the bank. Payments received from such appointments are
passed on to the bank.
remuneration report
The Co-operative Bank p.l.c.
30 31
Independent Auditor’s report to the members of The Co-operative Bank p.l.c.
We have audited the financial statements on pages 32 to 65.
This report is made solely to the company’s members, as a body, in accordance with section 235 of the Companies Act 1985 and, in respect of
corporate governance information, in accordance with the terms of our engagement letter dated 24th March 2003. Our audit work has been
undertaken so that we might state to the company’s members those matters we are required to state to them in this audit report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members, as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors are responsible for preparing the Annual Report. As described on page 26 this includes responsibility for preparing the financial
statements in accordance with applicable United Kingdom law and accounting standards. Our responsibilities, as independent auditors, are
established in the United Kingdom by statute, the Auditing Practices Board and by our profession’s ethical guidance.
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the
Companies Act 1985. We also report to you if, in our opinion, the directors’ report is not consistent with the financial statements, if the company
has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information
specified by law regarding directors’ remuneration and transactions with the Group is not disclosed.
We read the other information contained in the Annual Report, including the corporate governance statement, and consider whether it is consistent
with the audited financial statements. We consider the implications for our report if we become aware of any apparent misstatements or material
inconsistencies with the financial statements.
In addition to our audit of the financial statements, the directors have instructed us to review their corporate governance statement as if the
company were required to comply with the Listing Rules of the Financial Services Authority in relation to these matters. We review whether the
statement on pages 27 and 28 reflects the company’s compliance with the seven provisions of the Combined Code specified for our review by
those rules, and we report if it does not. We are not required to consider whether the Board’s statement on internal control covers all risks and
controls, or form an opinion on the effectiveness of the Group’s corporate governance procedures or its internal risk and control procedures.
Basis of audit opinion
We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test
basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates
and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the
Group’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us
with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud
or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial
statements.
Opinion
In our opinion the financial statements give a true and fair view of the state of affairs of the company and the Group as at 11th January 2003 and
of the profit of the Group for the year then ended and have been properly prepared in accordance with the Companies Act 1985.
KPMG Audit Plc
Chartered Accountants
Registered Auditor
Manchester
10th April 2003
auditor’s report
The Co-operative Bank p.l.c. Notes 2002 2001
Interest receivable
Interest receivable and similar income arising from debt securities 131.3 166.8
Other interest receivable and similar income 397.4 396.4
528.7 563.2
Interest payable (199.1) (249.7)
Net Interest Income 329.6 313.5
Dividend income 0.2 –
Fees and commissions receivable 179.0 163.7
Fees and commissions payable (23.8) (20.1)
Dealing losses 29 (1.6) (1.5)
Operating Income 483.4 455.6
Administrative expenses
Staff costs 1 (122.0) (116.3)
Other (148.7) (143.5)
Depreciation and amortisation 17 (20.1) (22.1)
(290.8) (281.9)
192.6 173.7
Provisions for bad and doubtful debts 12 (70.1) (66.2)
Group Operating Profit 122.5 107.5
Income from interests in associated undertakings – –
Profit on Ordinary Activities before Taxation 2 122.5 107.5
Taxation on profit on ordinary activities 5 (36.6) (31.7)
Profit on Ordinary Activities after Taxation 85.9 75.8
Minority interests (2.2) (1.8)
Profit for the Financial Year 6 83.7 74.0
Preference dividend to non-equity shareholders 7 (5.5) (5.5)
Retained Profit for the Year 26 78.2 68.5
Earnings per share (basic and diluted) 8 11.17p 9.79p
Movements in profit and loss account reserves are shown in note 26 on page 56.
All profits have been derived from continuing operations.
Statement of Total Recognised gains and losses
For the year ended 11th January 2003
all amounts are stated in £’m unless otherwise stated 2002 2001
Profit for the financial year 78.2 68.5
Prior year adjustment (as explained on page 37) 1.6 –
Total gains and losses recognised since last annual report 79.8 68.5
consolidated profit and loss account
The Co-operative Bank p.l.c.
for the year ended 11th January 2003
all amounts are stated in £m unless otherwise indicated
32 The notes on pages 37 to 65 form part of these financial statements Notes 2002 2001
Assets
Cash and balances at central banks 97.5 113.7
Items in the course of collection from other banks 165.2 145.6
Treasury bills and other eligible bills 9 18.0 1.6
Loans and advances to banks 10 1,291.0 733.2
Loans and advances to customers 11 4,384.6 3,869.2
Debt securities 13 2,478.1 2,749.4
Equity shares 14 0.9 1.3
Interests in associated undertakings 15 0.2 0.6
Tangible fixed assets 17 78.4 67.3
Other assets 18 68.5 36.4
Prepayments and accrued income 105.2 107.9
Total assets 27 8,687.6 7,826.2
Liabilities
Items in the course of transmission to other banks 7.2 10.2
Deposits by banks 19 748.5 727.3
Customer accounts 20 6,902.0 6,115.8
Debt securities in issue 21 5.0 87.5
Other liabilities 22 132.4 90.8
Accruals and deferred income 141.2 128.5
Provisions for liabilities and charges 23
Deferred taxation 8.7 8.9*
Other provisions 11.5 6.0
Subordinated liabilities (including convertible debt) 24 179.6 179.4
Minority interests (equity) 16 18.9 17.4
Called up share capital 25
Ordinary shares 35.0 35.0
Preference shares (non-equity) 60.0 60.0
95.0 95.0
Share premium account 26 8.8 8.8
Profit and loss account 26 428.8 350.6*
Shareholders’ funds (£60 million of which relates to non-equity) 532.6 454.4*
Total liabilities 27 8,687.6 7,826.2
Memorandum items 28
Contingent liabilities
Acceptances and endorsements 28.0 37.9
Guarantees and assets pledged as collateral security 98.3 71.8
126.3 109.7
Commitments
Other commitments 5,356.4 4,991.1
* Restated (see page 37)
Approved by the Board on 10th April 2003 and signed on its behalf by
G. R. Bennett, Chairman
M. K. Pedelty, Chief Executive
consolidated balance sheet
The Co-operative Bank p.l.c.
at 11th January 2003
all amounts are stated in £m unless otherwise indicated
33 The notes on pages 37 to 65 form part of these financial statements Notes 2002 2001
Assets
Cash and balances at central banks 97.5 113.7
Items in the course of collection from other banks 164.9 145.3
Treasury bills and other eligible bills 9 18.0 1.6
Loans and advances to banks 10 1,291.0 733.2
Loans and advances to customers 11 4,329.2 3,817.4
Debt securities 13 2,266.0 2,560.6
Equity shares 14 0.9 1.3
Shares in Group undertakings 16 1.2 1.2
Tangible fixed assets 17 70.6 59.1
Other assets 18 69.9 38.8*
Prepayments and accrued income 96.2 100.3
Total assets 27 8,405.4 7,572.5*
Liabilities
Items in the course of transmission to other banks 6.7 9.9
Deposits by banks 19 756.4 733.6
Customer accounts 20 6,679.5 5,906.8
Debt securities in issue 21 5.0 87.5
Other liabilities 22 128.4 86.3
Accruals and deferred income 122.2 126.1
Provisions for liabilities and charges 23 9.9 3.6
Subordinated liabilities 24 178.9 178.7
Called up share capital 25
Ordinary shares 35.0 35.0
Preference shares (non-equity) 60.0 60.0
95.0 95.0
Share premium account 26 8.8 8.8
Profit and loss account 26 414.6 336.2*
Shareholders’ funds (£60 million of which relates to non-equity) 518.4 440.0*
Total liabilities 27 8,405.4 7,572.5*
Memorandum items 28
Contingent liabilities
Acceptances and endorsements 28.0 37.9
Guarantees and assets pledged as collateral security 98.1 71.6
126.1 109.5
Commitments
Other commitments 5,353.0 4,978.0
* Restated (see page 37)
Approved by the Board on 10th April 2003 and signed on its behalf by
G. R. Bennett, Chairman
M. K. Pedelty, Chief Executive
balance sheet
The Co-operative Bank p.l.c.
at 11th January 2003
all amounts are stated in £m unless otherwise indicated
34 The notes on pages 37 to 65 form part of these financial statements 2002 2001
Group
Profit for the financial year 83.7 74.0
Dividends (5.5) (5.5)
Net increase in shareholders’ funds 78.2 68.5
Shareholders’ funds at beginning of year 454.4 385.9*
Shareholders’ funds at end of year 532.6 454.4*
Bank
Profit for the financial year 83.9 72.7
Dividends (5.5) (5.5)
Net increase in shareholders’ funds 78.4 67.2
Shareholders’ funds at beginning of year 440.0 372.8*
Shareholders’ funds at end of year 518.4 440.0*
* Restated (see page 37)
reconciliation of movements in shareholders’ funds
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
35 The notes on pages 37 to 65 form part of these financial statements Notes 2002 2001
Net cash (outflow)/inflow from operating activities 31 (25.2) 144.6
Dividends from associated undertakings 0.4 –
Returns on investments and servicing of finance
Preference dividends paid (5.6) (5.6)
Interest paid on subordinated liabilities (13.9) (14.2)
Dividend paid to minority shareholders in subsidiary undertaking (0.6) (0.5)
Net cash outflow from returns on investments 
and servicing of finance (20.1) (20.3)
Taxation
United Kingdom corporation tax paid (36.3) (32.0)
Capital expenditure and financial investment
Purchase of investments (428.1) (701.6)
Sale and maturity of investments 520.1 681.2
Purchase of tangible fixed assets (27.2) (21.2)
Sale of tangible fixed assets 0.2 0.4
Net cash inflow/(outflow) from capital expenditure and 
financial investment 65.0 (41.2)
(Decrease)/increase in cash 31 (16.2) 51.1
consolidated cash flow statement
The Co-operative Bank p.l.c.
for the year ended 11th January 2003
all amounts are stated in £m unless otherwise indicated
36 The notes on pages 37 to 65 form part of these financial statements 37
Accounting policies
(a) Basis of preparation and accounting date
(i) The financial statements of the Group relate to the 52 weeks to 11th January 2003. Since the Group accounting date is virtually 
co-terminous with the calendar year 2002 the financial year’s figures are headed 2002 and the corresponding figures for the previous
year are headed 2001. The financial statements are prepared on a historical cost basis in accordance with the special provisions of Part
VII of the Companies Act 1985 relating to Banking Groups, applicable accounting standards and statements of recommended
accounting practice issued by the British Bankers’ Association, the Irish Bankers’ Federation and the Finance and Leasing Association.
The bank has adopted the requirements of FRS 19 and the transitional provisions of FRS 17. The implementation of FRS 19 ‘Deferred
Tax’ has resulted in the recognition of a deferred tax asset on the general bad debt provision. There has been no impact on the 2002
and 2001 profit and loss accounts and cash flow statements. Under FRS 19, full provision is made for tax timing differences and in
particular, deferred tax assets can be recognised where it is more likely than not that there will be sufficient taxable profits against which
to recover them. Previously, they were recognised only where it was probable that they would be recovered without replacement in the
foreseeable future. Had the previous accounting policy been continued for the financial year ended 11th January 2003 deferred tax
assets of £0.9 million for the bank and deferred tax liability of £10.3 million for the Group would have been reported. The consolidated
balance sheet and company comparative figures have been restated to reflect a prior year adjustment of £1.6 million to reduce deferred
tax liability (bank: increase deferred tax asset) and increase the profit and loss account reserves. No other accounting policies have
changed during the year.
The financial statements contain information prepared on a basis consistent with the requirements of Schedule 9 to the Companies Act
1985 which sets out specific requirements regarding the format of the balance sheet and profit and loss account.
(ii) Associated undertakings
In the consolidated balance sheet associated undertakings are shown at cost and the Group’s share of reserves from the date of
acquisition, less amounts written off.
(iii) Goodwill
Purchased goodwill (both positive and negative) arising on consolidation in respect of acquisitions before 10th January 1998, when FRS
10 – Goodwill and intangible assets was adopted, was written off to reserves in the year of acquisition. When a subsequent disposal
occurs any related goodwill previously written off to reserves is written back through the profit and loss account as part of the profit and
loss on disposal.
(b) Debt securities
Held as investment securities
Dated securities are valued at cost, adjusted for the amortisation of premiums and discounts in the purchase price.
Undated securities are valued at the lower of cost or market value.
The amortisation of premiums and discounts on dated securities is included in interest income and is calculated to maintain a level yield from
the date of acquisition to maturity.
Realised profits and losses on the sale of debt securities held in designated closed investment portfolios are taken to the profit and loss
account based on the maturity profile of the portfolio. This treatment has been adopted in order that the financial statements give a true and
fair view of the operation of these closed investment portfolios. As a consequence in this respect, the financial statements depart from the
Companies Act 1985. The normal treatment is to recognise profits and losses as they arise which would result in unrepresentative volatility
from a closed portfolio which is operated as a single long-term financial fixed asset. The treatment of amortising profits and losses has been
adopted to reflect this (see note 13).
Realised profits and losses on the sale of other investment debt securities are taken to the profit and loss account in the year in which 
they arise.
Held as dealing securities
Securities held for dealing purposes are stated at market value. Realised and unrealised changes in market value are included in the profit
and loss account within dealing profits/losses.
(c) Loans and advances and doubtful debts
Loan loss provisions, which are charged against operating profit, comprise specific and general provisions. Specific and general provisions
are deducted from loans and advances to customers in the balance sheet.
Specific provisions
Specific provisions are raised when an account is deemed to be impaired and represent the quantification of actual and expected losses from
identified accounts. Other than where provisions on smaller balance homogenous loans are assessed on a portfolio basis, the amount of
specific provision raised is assessed on a case by case basis. The amount of specific provision raised is a conservative estimate of the amount
needed to reduce the carrying value of the asset to the expected ultimate net realisable value. Loans assessed on a portfolio basis are
allocated into various bands according to delinquency and provision is made on all debts with delinquency greater than a pre-determined
trigger point. The level of provisioning takes into account management’s assessment of the portfolio’s structure, past and expected credit
losses, and any other relevant factors.
accounting policies
The Co-operative Bank p.l.c. 38
In reaching a decision on a case by case basis, consideration is given, among other things, to the following factors:
• the financial standing of the customer, including a realistic assessment of the likelihood of repayment of the loan within an acceptable
period;
• the realisable value of any security for the loan; and
• the costs associated with obtaining repayment and realisation of the security.
General provisions
A general provision is maintained based on management’s expectations of losses that will be made on assets which are impaired but which
have not been specifically identified as such. Consideration is given to the circumstances and level of prudence used in determining the
specific provisions.
Loans on which interest is being suspended
If the collection of interest is doubtful, it is credited to a suspended interest account and excluded from interest income in the profit and loss
account. Although it continues to be charged to the customers’ account, the suspense account in the balance sheet is netted against the
relevant loan. If the collection of interest is considered to be remote, interest is no longer applied and suspended interest is written off.
On receipt of cash (other than from the realisation of security), suspended interest is recovered and taken to the profit and loss account as
interest receivable. Amounts received from the realisation of security are applied to the repayment of outstanding indebtedness, with any
surplus used to recover any specific provisions and then suspended interest.
Write off occurs at the point when accounts are no longer actively being collected and it is expected that no more cash will be received.
Revenue and cost recognition
Fees charged at the inception of the advance which represent a payment for services provided in setting up the advance are credited to the
profit and loss account when they are receivable.
Fees charged at the inception of the advance which represent either a payment for continuing services or an additional interest charge are
credited to the profit and loss account on a straight line basis or pro-rata to the amount outstanding as appropriate.
Interest earned on loans and advances is credited to the profit and loss account as it accrues.
Costs incurred with mortgage incentive schemes are charged in the period in which the expense is incurred, but where the bank has the right
to recover the incentive in the event of early redemption, then the costs are amortised over the life of the redemption period. However, these
costs are charged to the profit and loss account should the related loan be redeemed, sold or become impaired.
(d) Sale and repurchase transactions
Securities which have been sold with an agreement to repurchase continue to be shown on the balance sheet and the sale proceeds recorded
as a deposit. Securities acquired in reverse sale and repurchase transactions are not recognised in the balance sheet and the purchase price
is treated as a loan. The difference between the sale price and the repurchase price is accrued evenly over the life of the transaction and
charged or credited to the profit and loss account as interest payable or receivable.
(e) Depreciation
Depreciation is provided on a straight line basis at the following rates which are estimated to write down the assets to realisable values at the
end of their useful lives.
Freehold and long leasehold buildings 2.5 per cent per annum
Short leasehold buildings life of lease
Equipment 10 to 33.3 per cent per annum
Vehicles 25 per cent per annum
(f) Assets leased to customers
Assets leased to customers are included within ‘loans and advances to customers’ and valued at original cost less depreciation, which is
calculated to write off that cost over the primary period of the lease. Depreciation for the year represents the full amount of lease payments
due in the year, less the amounts credited to the profit and loss account.
Income from assets leased to customers is credited to the profit and loss account within ‘other interest receivable and similar income’ under
the Investment Period Method which gives a constant return on the net investment in the lease.
For certain contracts, changes in the rate of Corporation Tax give rise to taxation benefits which are passed on to the lessees as a reduction
in rental payable. A provision for the reduction in lease receivables is charged to profit before tax and the tax benefit reflected as a reduced
tax charge. The provision is released to profit over the period of the contract.
(g) Leased assets
Assets acquired under finance leases are capitalised, based on the purchase price of the assets. Depreciation is provided over the shorter of
the lease term and the useful economic life. The interest element of the lease payment is charged to the profit and loss account on the basis
of the actuarial method over the primary period of the lease. The capital value of the lease is included in the balance sheet as a liability reduced
by the capital element of the lease payments.
Operating lease rentals are charged to the profit and loss account on a straight line basis.
accounting policies
The Co-operative Bank p.l.c. (h) Deferred taxation
Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and
accounting purposes which have arisen but not reversed by the balance sheet date, except as otherwise required by FRS 19.
(i) Pension costs
In accordance with actuarial advice, pension costs are charged to the profit and loss account to ensure that the regular cost is substantially
a level percentage of the current and anticipated pensionable earnings. Variations from the regular cost are allocated over the average
remaining working lives of current employees.
(j) Exchange rates
Balances in foreign currencies are expressed in sterling at the rate ruling at the balance sheet date. All exchange differences are dealt with in
the profit and loss account.
(k) Derivatives
Derivatives used for asset and liability management purposes
Derivatives are used to hedge interest and exchange rate exposures related to non-trading positions. Instruments used for hedging purposes
include swaps, forward rate agreements, futures, options and combinations of these instruments.
Derivatives used for hedging purposes are measured on an accruals basis consistent with the assets, liabilities, positions or future cash flows
being hedged. The gains and losses on these instruments (arising from changes in fair value) are not recognised in the profit and loss account
or balance sheet as they arise.
To qualify as a hedge, a derivative must effectively reduce the price or interest rate risk of the asset, liability or anticipated position to which
it is linked and be designated as a hedge at inception of the derivative contract.
Positions are matched by time and amount to ensure that the derivatives are effective hedges.
Profits and losses on interest rate swaps and options entered into for hedging purposes are measured on an accrual accounting basis,
included in the related category of income and expense and reported as part of the yield on the hedged transaction.
Hedging transactions that are superseded or cease to be effective are measured at fair value. Any profit or loss on these transactions, together
with any profit or loss arising on hedging transactions that are terminated prior to the end of the life of the asset, are deferred and amortised
into interest income or expense over the remaining life of the derivative.
When the underlying asset, liability, position or cash flow is terminated prior to the hedging transaction, or an anticipated transaction is no
longer likely to occur, the hedging transaction is measured on the fair value accounting basis, prior to being transferred to the trading portfolio.
The profit or loss arising from the fair value measurement prior to the transfer to the trading portfolio is immediately included in the category
of income or expense relating to the previously hedged transaction.
Derivatives used for trading purposes
Derivatives entered into for trading purposes include swaps, forward rate agreements, futures, options and combinations of these
instruments.
Derivatives used for trading purposes, which include proprietary transactions and customer facilitation, are measured at fair value and any
gains or losses are shown in the profit and loss account as dealing profits/losses. The use of derivatives and their sale to customers as risk
management products is an integral part of the Group’s trading activities.
(l) Dealing
Dealing profits comprise the net gain or loss arising from trading transactions in securities and financial instruments but exclude any gains or
losses arising from financial fixed assets. Financial fixed assets are those assets intended for use on a continuing basis in the bank’s activities.
accounting policies
The Co-operative Bank p.l.c.
39 1. Staff costs 2002 2001
Wages and salaries 93.3 88.9
Social security costs 7.1 6.9
Other pension costs 14.3 12.6
Other staff costs 7.3 7.9
122.0 116.3
2. Profit on ordinary activities before taxation 2002 2001
Is stated after:
(i) Income:
Aggregate amounts receivable, including capital repayments, under
finance leases, hire purchase and conditional sale contracts 76.9 72.3
Income from listed investments 23.7 34.2
Profits on disposal of investment securities 7.0 6.8
(ii) Charges:
Interest payable in respect of subordinated liabilities 13.9 14.4
Rentals payable in respect of operating leases
hire of computers, equipment and vehicles 1.2 1.6
other operating leases 11.2 11.8
£’000 £’000
Statutory audit services – parent company £180,500 (2001–£165,500) 310 279
Further assurance services 371 492
Other non-audit services 274 117
Fees paid to the auditor 955 888
3. Directors’ emoluments 2002 2001
£’000 £’000
Non-executive Directors – –
Executive Directors 2,318 1,874
Compensation for loss of office 30 104
Payments to third parties for services of Non-executive Directors 11 11
2,359 1,989
Retirement benefits are accruing to six Directors (2001–six) under defined benefit schemes.
The emoluments of the highest paid Director were:
2002 2001
£’000 £’000
Aggregate emoluments 615 525
Defined benefit scheme, accrued pension at the end of the year 81 51
Further details of Directors’ emoluments are included in the remuneration report on page 30.
notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
40 notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
41
4. Pensions
In November 2000 the Accounting Standards Board issued FRS 17, ‘Retirement benefits’, which will replace SSAP 24, ‘Accounting for pension
costs’. FRS 17 is fully effective for the bank’s year ending 14th January 2006, however, certain disclosures are required in the transitional period.
The charge included within the profit and loss account has been calculated in accordance with SSAP 24 and disclosure requirements relating to
this charge are set out in part (a) below. The additional disclosure requirements of FRS 17 are set out in part (b).
a) SSAP 24 disclosures
The bank operates a funded pension scheme of the defined benefit type. This provides benefits based on final pensionable pay. The assets of the
scheme are held in a separate trustee administered fund.
The bank also operates a small unfunded pension scheme. The pension charge is assessed in the same manner and using the same assumptions
as the funded scheme. As at 11th January 2003, the actuarial value of the unfunded pension liability for obligations in respect of former directors
was £0.7 million.
The total pension charge was £14.3 million (2001–£12.6 million). The pension charge is assessed in accordance with the advice of a qualified
actuary using the projected unit method. The latest full actuarial valuation of the funded scheme was at 5th April 2000. The assumptions which
have the most significant effect on the results of the valuation are those relating to the rate of return on investments and the rate of increase in
salaries, pensions and equity dividends. It was assumed that the investment return would be 6.5% per annum, that salary increases would average
4.5% per annum, that present and future pensions would increase at the rate of 2.5% per annum and that equity dividends would increase at an
average rate of 3.5% per annum.
At the date of the latest actuarial valuation, the market value of the assets of the funded scheme was £329.8 million and the actuarial value of the
assets was sufficient to cover 111% of the benefits that had accrued to members, after allowing for future increases in earnings.
The amount charged in the profit and loss account (£14.3 million) exceeds the amount paid into the funded Pension Scheme (£12.3 million) 
by £2.0 million  (2001–£1.4 million) resulting in an accrual of £4.4 million (2001–£2.4 million), which includes the unfunded pension liability of 
£0.7 million (2001–nil).
The actuaries to the scheme are employed by Co-operative Insurance Society Limited, a fellow subsidiary undertaking of Co-operative Financial
Services Limited.
b) FRS 17 disclosures
The actuarial valuation noted in part (a) above has been updated to 11th January 2003. The principal assumptions used to calculate the schemes
liabilities were: 
2002 2001
Inflation rate 2.3% 2.6%
Rate of increase of pensions in payment 2.3% 2.6%
Rate of increase in salaries 3.8% 4.1%
Discount rate 5.4% 5.9%
The assumptions used by the actuary are the best estimates chosen from a range of possible actuarial assumptions which, due to the timescale
covered, may not necessarily be borne out in practice. The fair value of the scheme’s assets, which are not intended to be realised in the future,
may be subject to significant change before they are realised. The present value of the scheme liabilities is derived from cash flow projections over
long periods and is sensitive to the principal assumptions shown above. As an indication of the sensitivity, a 0.3 percentage point movement in the
discount rate would have an effect on the surplus or deficit of approximately £25 million and a 0.3 percentage point movement in the rate of increase
in salaries would have an effect on the surplus or deficit of approximately £8 million.
The basis of valuation and assumptions used for the FRS 17 valuation are different from those used for the formal actuarial valuation of the scheme
to assess the future pension charge. The actuarial valuation is calculated using projected future earnings and as such does not produce significant
short term changes in value. The actuaries to the scheme have carried out an approximate valuation of the scheme as at 11th January 2003 using
the same assumptions as were used for the formal valuation carried out as at 5th April 2000. On this basis the actuary has estimated that as at
11th January 2003 the actuarial valuation of the assets was approximately £10 million lower (approximately 3%) than the present value of the
benefits that had accrued to members, after allowing for future increases in earnings. This figure is an estimate and a full formal valuation of the
scheme will be carried out as at 5th April 2003. 4. Pensions (continued)
The values of the assets and liabilities of the scheme and the expected rate of return on those assets were:
2002 2001
£m % £m %
Equities 211.7 7.0 265.1 7.5
Bonds 21.6 4.5 25.4 5.0
233.3 290.5
Present value of Scheme liabilities (340.9) (295.0)
Surplus/(deficit) in the scheme (107.6) (4.5)
Related deferred tax asset 32.3 1.4
Net pension asset/(liability) (75.3) (3.1)
The amount of this net pension liability would have a consequential effect on reserves.
Had the bank fully adopted FRS 17 at the year end, the profit and loss account disclosures would have been stated as follows:
Analysis of amount charged to operating profit £m
Current service cost 15.6
Past service cost –
15.6
Analysis of amount credited to other financial income £m
Expected return on pension scheme assets 21.4
Interest on pension scheme liabilities (17.7)
Net return 3.7
The movement in deficit during the year was as follows: £m
Deficit at beginning of the year (4.5)
Movement in the year:
Current service cost (15.6)
Contributions 12.3
Past service costs –
Other finance income 3.7
Actuarial gain/(loss) (103.5)
Deficit in scheme at the end of the year (107.6)
Analysis of amount recognised in statement of total recognised gains and losses (STRGL) £m
Actual return less expected return on pension scheme assets (84.2)
Experience gains and losses arising on the scheme liabilities (1.1)
Changes in assumptions underlying the present value of the scheme liabilities (18.2)
Actuarial gain/(loss) recognised in STRGL (103.5)
History of experience gains and losses £m %
Difference between the expected and actual return on scheme assets: (% of scheme assets) (84.2) 36.1
Experience gains and losses on scheme liabilities: (% of the present value of the scheme liabilities) (1.1) 0.3
Total amount recognised in STRGL: (% of the present value of the scheme liabilities) (103.5) 30.4
The bank makes contributions to the scheme at a rate designed to meet the cost of all benefits provided by the scheme (other than those provided
by members through the payment of voluntary contributions). Prior to 12th January 2003 the bank paid contributions at the rate of 15% of
pensionable salaries. From 12th January 2003 the bank will pay contributions at the rate of 15.6% of pensionable salaries. In addition a one-off
contribution representing 0.6% of pensionable salaries for the period from 6th March 2001 to 11th January 2003 will be paid into the scheme. Total
contributions paid by the bank amounted to approximately £12.3 million. The contribution rate will be reviewed in conjunction with the formal
valuation of the scheme due to be carried out as at 5th April 2003.
notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
42 notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
43
5. Taxation on profit on ordinary activities 2002 2001
£m £m
a) Analysis of charge in period
Current tax
UK Corporation tax on profits of the period 37.5 33.9
Adjustments in respect of previous periods (0.7) (1.1)
Total current tax 36.8 32.8
Deferred tax
Origination and reversal of timing differences (0.2) (1.1)
Total deferred tax (0.2) (1.1)
Tax on profit on ordinary activities 36.6 31.7
b) Factors affecting tax charge for the period
The actual tax charge for the year differs from that calculated using the standard rate of corporate tax in the UK. The differences are explained
below:
2002 2001
£m £m
Profit on ordinary activities before tax 122.5 107.5
Profit on ordinary activities before tax at the standard rate of UK Corporation tax (30%) 36.8 32.3
Effects of:
Expenses not deductible for tax purposes 0.2 0.3
Depreciation in excess of capital allowances for period and other timing differences 0.3 1.2
Depreciation of expenditure not qualifying for capital allowances 0.2 0.2
Utilisation of capital losses – (0.1)
Adjustments to tax charge in respect of previous periods (0.7) (1.1)
Current tax charge for the year 36.8 32.8
Full recovery of Group relief has been assumed as there are sufficient taxable profits available within the Group to cover any tax losses.
6. Group profit for the financial year dealt with in the accounts of The Co-operative Bank p.l.c.
£83.9 million (2001–£72.7 million) of the Group profit for the financial year attributable to shareholders has been dealt with in the accounts of 
The Co-operative Bank p.l.c. As permitted by Section 230 of the Companies Act 1985, the profit and loss account of The Co-operative Bank p.l.c.
has not been presented separately.
7. Dividends 2002 2001 2002 2001
pence pence
per share per share £m £m
Dividend on 60,000,000 9.25%
non-cumulative irredeemable
preference shares of £1 each
(paid and proposed) 9.25p 9.25p 5.5 5.5 8. Earnings per share
Earnings per share are calculated by dividing the profit for the financial year £83.7 million (2001–£74.0 million) less dividends on preference shares 
£5.5 million (2001–£5.5 million) by the weighted average number of ordinary shares 700,000,000 (2001–700,000,000) in issue during the year.
9. Treasury bills and other eligible bills Group and Bank
2002 2001
£m £m
Other securities
other eligible bills – private sector 18.0 1.6
10. Loans and advances to banks The Group The Bank
2002 2001 2002 2001
Remaining maturity:
over 5 years 5.8 5.4 5.8 5.4
1 year or less but over 3 months 1.5 0.6 1.5 0.6
3 months or less but not repayable
on demand 1,283.4 726.9 1,283.4 726.9
Repayable on demand 0.3 0.3 0.3 0.3
1,291.0 733.2 1,291.0 733.2
11. Loans and advances to customers The Group The Bank
2002 2001 2002 2001
Remaining maturity:
over 5 years 1,157.3 788.8 1,084.0 713.5
5 years or less but over 1 year 1,449.5 1,407.9 1,400.0 1,357.9
1 year or less but over 3 months 548.2 543.8 538.9 527.0
3 months or less but not repayable
on demand 821.6 768.2 912.0 865.4
Repayable on demand 596.7 524.3 575.9 512.3
General and specific bad and doubtful
debt provisions (note 12) (185.7) (161.0) (180.7) (157.7)
Suspended interest provisions (3.0) (2.8) (0.9) (1.0)
4,384.6 3,869.2 4,329.2 3,817.4
Amounts include:
Due from subsidiary undertakings
unsubordinated 92.8 97.5
Due from parent undertakings 33.3 47.0 33.3 47.0
Due from associated undertakings 5.0 1.9 5.0 –
Analysis of concentration of exposure is provided in note 34(iii) on page 65.
notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
44 notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
45
12. Provisions for bad and doubtful debts
2002 2001
Specific General Total Specific General Total
Group:
At 12th January 2002 155.6 5.4 161.0 140.2 5.4 145.6
Charge against profits (i) 70.2 – 70.2 66.2 – 66.2
Amounts written off (45.6) – (45.6) (51.0) – (51.0)
Recoveries 0.1 – 0.1 0.2 – 0.2
At 11th January 2003 180.3 5.4 185.7 155.6 5.4 161.0
Bank:
At 12th January 2002 152.5 5.2 157.7 139.3 5.2 144.5
Charge against profits 68.2 – 68.2 64.0 – 64.0
Amounts written off (45.3) – (45.3) (51.0) – (51.0)
Recoveries 0.1 – 0.1 0.2 – 0.2
At 11th January 2003 175.5 5.2 180.7 152.5 5.2 157.7
All provisions are held against loans and advances to customers.
Non-performing debt:
Group advances 114.0 106.2
Provisions for bad and doubtful debts (92.8) (85.2)
21.2 21.0
Bank advances 105.2 100.6
Provisions for bad and doubtful debts (88.0) (82.1)
17.2 18.5
(i) The charge for provisions for bad and doubtful debts of £70.1 million on page 32, includes a release of £0.1 million (2001–nil) relating to equity
shares (see note 14, page 48). 13. Debt securities The Group The Bank
2002 2001 2002 2001
Balance Market Balance Market Balance Market Balance Market
sheet value sheet value sheet value sheet value
(i) Issue
Issued by public bodies
Investment securities
government securities 24.8 28.4 29.9 34.6 24.7 28.3 29.8 34.5
other public sector securities 15.2 18.1 15.3 16.6 15.2 18.1 15.3 16.6
40.0 46.5 45.2 51.2 39.9 46.4 45.1 51.1
Other securities
government securities 25.4 308.7 25.4 308.7
65.4 353.9 65.3 353.8
Issued by other issuers
Investment securities
bank and building society
certificates of deposit 212.5 218.6 189.5 194.9 –– ––
other debt securities 476.5 479.1 596.0 599.7 476.5 479.1 596.0 599.7
689.0 697.7 785.5 794.6 476.5 479.1 596.0 599.7
Other securities
bank and building society
certificates of deposit 1,735.4 1,628.7 1,735.4 1,628.7
other debt securities – – – –
2,424.4 2,414.2 2,211.9 2,224.7
2,489.8 2,768.1 2,277.2 2,578.5
Unamortised profit on sales
of investment securities (11.7) (18.7) (11.2) (17.9)
2,478.1 2,749.4 2,266.0 2,560.6
(ii) Maturity
Due within one year 2,125.1 2,346.3 1,912.6 2,156.8
Due one year and over 364.7 421.8 364.6 421.7
2,489.8 2,768.1 2,277.2 2,578.5
Unamortised profit on sales
of investment securities (11.7) (18.7) (11.2) (17.9)
2,478.1 2,749.4 2,266.0 2,560.6
Unamortised premiums on 
investment securities 2.1 2.5 2.1 2.5
notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
46 notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
47
13. Debt Securities (continued)
The Group The Bank
2002 2001 2002 2001
Balance Market Balance Market Balance Market Balance Market
sheet value sheet value sheet value sheet value
(iii) Listing
Investment securities
listed on a recognised UK
exchange 381.0 388.4 505.4 513.6 380.9 388.3 505.3 513.5
listed elsewhere 129.9 131.6 128.3 129.8 129.9 131.6 128.3 129.8
unlisted 218.1 224.2 197.0 202.4 5.6 5.6 7.5 7.5
729.0 744.2 830.7 845.8 516.4 525.5 641.1 650.8
Unamortised profit on 
sales of investment 
securities (11.7) (18.7) (11.2) (17.9)
717.3 812.0 505.2 623.2
Other securities
listed on a recognised UK
exchange 25.4 308.7 25.4 308.7
listed elsewhere – – – –
unlisted 1,735.4 1,628.7 1,735.4 1,628.7
1,760.8 1,937.4 1,760.8 1,937.4
2,478.1 2,749.4 2,266.0 2,560.6
Cost Discounts Unamortised Carrying
and premiums profit on sales value
(iv) Movement
Investment securities
Group:
At 12th January 2002 815.8 14.9 (18.7) 812.0
Acquisitions 428.1 – – 428.1
Disposals and maturities (521.5) 1.9 – (519.6)
Exchange adjustments – (9.7) – (9.7)
Amortisation – (0.5) 7.0 6.5
At 11th January 2003 722.4 6.6 (11.7) 717.3
Bank:
At 12th January 2002 624.3 16.8 (17.9) 623.2
Acquisitions 106.6 – – 106.6
Disposals and maturities (221.1) – – (221.1)
Exchange adjustments – (9.7) – (9.7)
Amortisation – (0.5) 6.7 6.2
At 11th January 2003 509.8 6.6 (11.2) 505.2
The exchange adjustment of £9.7 million represents the revaluation of debt securities held in a currency other than sterling. These are hedged by
deposits of equal value held in the same currency. The net gain on these transactions due to foreign exchange revaluation is nil.
Group 
Profits on disposals in the year were £nil million (2001–£nil). However, due to the application of accounting policy (b) relating to securities held in
designated investment portfolios, £7.0 million (2001–£6.9 million) has been credited to the profit and loss account. The application of this
accounting policy therefore increased profits for the year by £7.0 million (2001–£6.9 million).
Bank 
Profits on disposals in the year were £nil million (2001–£nil). However, due to the application of accounting policy (b) relating to securities held in
designated investment portfolios, £6.7 million (2001–£6.7 million) has been credited to the profit and loss account. The application of this
accounting policy therefore increased profits for the year by £6.7 million (2001–£6.7 million). 14. Equity shares Group and Bank
2002 2001
Investment securities – unlisted 0.9 1.3
Group and Bank
2002 2001
Included above are the following trade investments: 
BACS Ltd 83,568 (2001–83,568) ordinary shares of £1 each 0.6 0.6
LINK Interchange Network Limited 3,550 (2001–3,421) ordinary shares of £1 each
and 72,380 (2001–69,748) ordinary shares of £0.01 each 0.1 –
0.7 0.6
All unlisted securities are valued by the Directors at cost, net of provisions raised.
Cost Provision Carrying
value
Group and Bank
At 12th January 2002 1.5 (0.2) 1.3
Additions 0.1 – 0.1
Disposals (0.6) 0.1 (0.5)
At 11th January 2003 1.0 (0.1) 0.9
15. Interests in associated undertakings
The interests in associated undertakings, all of which are incorporated in Great Britain and operate in England and none of which is quoted, are:
Nature of Total issued share Group Group
Associates business capital at 11th January 2003 interest interest
2002 2001
* Co-operative Pension Funds Investment managers 165,000 Ordinary shares of £1 each 33% 33%
Unit Trust Managers Limited
Nature of Total issued share Group Group
Joint ventures business capital at 11th January 2003 interest interest
2002 2001
Ochil Residential Limited Property development/ 2 Ordinary shares of £1 each 50% 50%
house building
† Unity Financial Holdings Limited Holding company 2 Ordinary shares of £1 each 13% 13%
§ Unity Pension Services Marketing of 400,000 Ordinary shares of £1 each 13% 13%
pension plans
§ Unity Financial Services Limited Marketing of 1,000,000 Ordinary shares of £1 each 13% 13%
financial services
§ Jacques Martin Unity Limited Administration 1,000,000 Ordinary shares of £1 each 13% 13%
of pension schemes
*   The ultimate holding organisation of this undertaking is Co-operative Group (CWS) Limited
†   Unity Trust Bank p.l.c. holds 50% of the ordinary share capital of this company
§   Unity Financial Holdings Limited holds 100% of the ordinary share capital of this company
notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
48 notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
49
15. Interests in associated undertakings (continued)
The interest in associates is made up as follows:
The Group The Bank
Share of 
net assets Cost
At 12th January 2002 0.4 –
Transfers (0.4) –
At 11th January 2003 ––
The interest in joint ventures is made up as follows:
The Group The Bank
Share of Share of Share of 
gross assets gross liabilities net assets Cost
At 12th January 2002 0.7 0.5 0.2 –
At 11th January 2003 3.2 3.0 0.2 –
16. Ultimate holding organisation and subsidiary undertakings
Co-operative Financial Services Limited owns 100% of the issued ordinary share capital of the bank and is the bank’s immediate holding company.
Co-operative Financial Services Limited is incorporated in Great Britain and is registered under the Industrial and Provident Societies Acts 1965 to
1978. The ultimate holding organisation is the Co-operative Group (CWS) Limited, which is incorporated in Great Britain and is registered under the
Industrial and Provident Societies Acts 1965 to 1978. The financial statements of the immediate and ultimate holding organisations are available
from New Century House, Manchester M60 4ES. The principal operating subsidiaries of The Co-operative Bank p.l.c., all of which are incorporated
in Great Britain and operate in England, and none of which are quoted are:
Operating subsidiaries Nature of business Total issued share Group Group
capital at 11th January 2003 interest interest
2002 2001
* Unity Trust Bank p.l.c. Banking 16,428,460 Ordinary shares of £1 each 27% 27%
Co-operative Commercial Investment company 1,000,000 Ordinary shares of £1 each 100% 100%
Limited
Roodhill Leasing Leasing 2 Ordinary shares of £1 each 100% 100%
Limited
First Roodhill Leasing Leasing 100 Ordinary shares of £1 each 100% 100%
Limited
Second Roodhill Leasing Leasing 100 Ordinary shares of £1 each 100% 100%
Limited
Third Roodhill Leasing Leasing 100 Ordinary shares of £1 each 100% 100%
Limited
Fourth Roodhill Leasing Leasing 100 Ordinary shares of £1 each 100% 100%
Limited
First Pioneers Leasing Leasing 100 Ordinary shares of £1 each 100% 100%
Limited
Second Pioneers Leasing Leasing 100 Ordinary shares of £1 each 100% 100%
Limited
Third Pioneers Leasing Leasing 100 Ordinary shares of £1 each 100% 100%
Limited
Co-operative Bank Financial advisers 100,000 Ordinary shares of £1 each 100% 100%
Financial Advisers Limited
* Held through subsidiary undertaking 16. Ultimate holding organisation and subsidiary undertakings (continued)
Shares in Group undertakings: Cost Provision Carrying
value
At 11th January 2003 and at 12th January 2002 1.6 0.4 1.2
The above provision is held against dormant subsidiaries.
Details of all Group companies will be annexed to the bank’s next annual return.
Unity Trust Bank p.l.c. is considered to be a subsidiary undertaking of The Co-operative Bank p.l.c. as The Co-operative Bank p.l.c. elects a majority
of the Directors and appoints the Chairman and Managing Director of Unity Trust Bank p.l.c.
The financial statements of the above undertaking are consolidated into the Group financial statements.
The following undertakings have year ends which are not co-terminous with that of The Co-operative Bank p.l.c. to enable competitive leasing
quotations to be offered throughout the year:
31st March First Roodhill Leasing Limited
First Pioneers Leasing Limited
30th June Second Roodhill Leasing Limited
Second Pioneers Leasing Limited
30th September Third Roodhill Leasing Limited
Third Pioneers Leasing Limited
The financial statements of these undertakings are consolidated into the Group financial statements on the basis of management accounts made
up to the parent undertaking’s balance sheet date.
notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
50 notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
51
17. Tangible fixed assets Freehold Computer Finance Total
and leasehold and other leased
buildings equipment assets
Group:
Cost
At 12th January 2002 10.3 153.8 1.7 165.8
Additions – 31.4 – 31.4
Disposals – (2.2) – (2.2)
At 11th January 2003 10.3 183.0 1.7 195.0
Accumulated depreciation
At 12th January 2002 1.7 95.1 1.7 98.5
Disposals – (2.0) – (2.0)
Charge for the year 0.2 19.9 – 20.1
At 11th January 2003 1.9 113.0 1.7 116.6
Net book value at 11th January 2003 8.4 70.0 – 78.4
Net book value at 12th January 2002 8.6 58.7 – 67.3
Bank:
Cost
At 12th January 2002 2.8 150.8 1.7 155.3
Additions – 30.9 – 30.9
Disposals – (1.8) – (1.8)
At 11th January 2003 2.8 179.9 1.7 184.4
Accumulated depreciation
At 12th January 2002 0.6 93.9 1.7 96.2
Disposals – (1.8) – (1.8)
Charge for the year 0.1 19.3 – 19.4
At 11th January 2003 0.7 111.4 1.7 113.8
Net book value at 11th January 2003 2.1 68.5 – 70.6
Net book value at 12th January 2002 2.2 56.9 – 59.1
The Group The Bank
2002 2001 2002 2001
The net book value of land and buildings comprises:
Freehold 8.3 8.5 2.0 2.1
Short leasehold 0.1 0.1 0.1 0.1
8.4 8.6 2.1 2.2
All land and buildings are occupied by the Group for its own activities. 18. Other assets The Group The Bank
2002 2001 2002 2001
Foreign exchange and interest rate
contracts 64.6 32.8 64.6 32.8
Trade debtors 3.9 3.6 2.8 1.9
Deferred taxation (see note 23) – – 2.5 4.1*
68.5 36.4 69.9 38.8*
* The above analysis has been restated following the introduction of FRS 19 ‘Deferred Tax’, see accounting policy (a) on page 37.
19. Deposits by banks The Group The Bank
2002 2001 2002 2001
With agreed maturity dates or periods
of notice, by remaining maturity:
1 year or less but over 3 months 2.0 10.0 2.0 10.0
3 months or less but not repayable
on demand 720.9 681.8 728.8 688.1
Repayable on demand 25.6 35.5 25.6 35.5
748.5 727.3 756.4 733.6
Amounts include:
Due to subsidiary undertakings 7.9 6.3
20. Customer accounts The Group The Bank
2002 2001 2002 2001
With agreed maturity dates or periods
of notice, by remaining maturity:
5 years or less but over 1 year 49.6 0.1 49.5 –
1 year or less but over 3 months 82.1 31.7 81.6 31.6
3 months or less but not repayable
on demand 2,145.6 1,861.3 2,071.7 1,792.6
Repayable on demand 4,624.7 4,222.7 4,476.7 4,082.6
6,902.0 6,115.8 6,679.5 5,906.8
Amounts include:
Due to subsidiary undertakings 1.6 3.6
Due to parent undertakings – 5.7 – 5.7
Due to fellow subsidiary undertakings 77.2 61.6 77.2 61.6
Due to associated undertakings 0.4 1.7 – 1.2
notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
52 notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
53
21. Debt securities in issue The Group The Bank
2002 2001 2002 2001
Other debt securities
By remaining maturity:
1 year or less but over 3 months 4.0 6.9 4.0 6.9
3 months or less 1.0 80.6 1.0 80.6
5.0 87.5 5.0 87.5
22. Other liabilities The Group The Bank
2002 2001 2002 2001
Foreign exchange and interest rate
contracts 56.3 27.2 56.3 27.2
Trade creditors 53.7 41.7 52.5 40.1
Taxation 21.2 20.8 18.9 18.3
Dividends 1.2 1.1 0.7 0.7
132.4 90.8 128.4 86.3
23. Provisions for liabilities and charges
The Group The Bank
2002 2001 2002 2001
(i) Deferred taxation
Taxation deferred by timing differences
in accordance with the basis of
accounting set out in Accounting
Policy (h)
Short term differences (1.9) (0.8) (1.8) (0.7)
Other timing differences (6.0) (7.7) (5.8) (7.6)
Capital allowances on fixed assets 1.9 1.0 1.3 0.6
Capital allowances on assets leased
to customers 14.7 16.4 3.8 3.6
8.7 8.9 * (2.5) * (4.1)
The movement in the deferred taxation
balance has all taken place through the
profit and loss account (0.2) (1.1) 1.6 0.3
The potential liability on rolled over gains and other gains not provided for, amounts to £1.6 million (2001–£1.0 million). Full provision has been
made for all other potential liabilities to deferred taxation.
* The net deferred taxation position for The Co-operative Bank p.l.c. gives rise to a deferred tax asset. This has been recognised in the balance
sheet of The Co-operative Bank p.l.c. and appears within the category Other assets (see note 18).
The above analysis has been restated following the introduction of FRS 19 ‘Deferred Tax’. See accounting policy (a) on page 37. 23. Provisions for liabilities and charges (continued)
(ii) Other provisions The Group The Bank
2002 2001 2002 2001
At 12th January 2002 6.0 5.3 3.6 2.6
Utilised (1.7) (2.8) – –
Profit and loss charge 7.2 3.5 6.3 1.0
At 11th January 2003 11.5 6.0 9.9 3.6
The above provisions at 11th January 2003 include an estimate of future unavoidable lease payments and related costs for vacant properties not
in use (group–£9.2 million, bank–£8.5 million) and an estimate of future payments to customers in compensation for loss suffered from past pension
and investment advice (group–£2.3 million, bank–£1.4 million).
Payments under future unavoidable lease commitments, net of amounts receivable under sub-lettings, are due on leases terminating between 2007
and 2016. Payments relating to past pension and investment advice will be made as individual cases are settled. The amounts provided in respect
of compensation are based on a case by case review of expected payment for each outstanding claim and an estimate of the number and value
of future claims based on past experience.
24. Subordinated liabilities The Group The Bank
2002 2001 2002 2001
£703,000 Convertible Subordinated
Unsecured Floating Rate Loan Stock 2003 0.7 0.7 – –
£50,000,000 Fixed Rate Perpetual Subordinated Notes 50.0 50.0 50.0 50.0
£30,000,000 Subordinated Perpetual Floating Rate Notes 30.0 30.0 30.0 30.0
£100,000,000 Step Up Callable Subordinated Notes 2011 100.0 100.0 100.0 100.0
Issue costs and discount (1.1) (1.3) (1.1) (1.3)
179.6 179.4 178.9 178.7
Remaining maturity of dated subordinated liabilities
Repayable
over five years 100.0 100.0 100.0 100.0
one year or less or on demand 0.7 0.7 – –
100.7 100.7 100.0 100.0
Convertible Subordinated Unsecured Floating Rate Loan Stock 2003
The loan stock was issued on 22nd April 1988 at par.
The loan stock is an unsecured obligation of Unity Trust Bank p.l.c. and, in the event of the winding-up of Unity Trust Bank p.l.c. the claims of the
holders will be subordinated in right of payment to the claims of depositors and other creditors of Unity Trust Bank p.l.c.
The loan stock carries an annual interest rate of 1% below six months LIBOR. Interest is payable half yearly in arrears on 30th June and 31st
December each year.
Each £100 nominal of loan stock is convertible at the holder’s option during May in any of the years 1993 to 2003 into 85 “C” ordinary shares of 
£1 each.
There were no conversions of loan stock during the year.
All loan stock not previously purchased, converted or repaid, will be repaid on 30th June 2003.
notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
54 notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
55
24. Subordinated liabilities (continued)
Fixed Rate Perpetual Subordinated Notes
The notes were issued on 20th December 1995 at a discount of 0.723%.
The notes are an unsecured obligation of the bank and in the event of the winding-up of the bank, the claims of noteholders will be subordinated
in right of payment to the claims of depositors and other creditors of the bank.
The notes carry an interest rate of 9.375% per annum to (but excluding) 21st December 2005. From this date and on 20th December in every fifth
year thereafter the interest rate will be determined by reference to the gross redemption yield on the five year benchmark gilt, and a margin of 2.70%.
Interest is payable annually in arrears on 20th December each year.
The bank may redeem all or part of the notes at their principal amount on 21st December 2005, and thereafter on every fifth Fixed Interest Date
(20th December).
Subordinated Perpetual Floating Rate Notes
The notes were issued on 9th January 1998.
The notes are an unsecured obligation of the bank and in the event of the winding-up of the bank, the claims of noteholders will be subordinated
in right of payment to the claims of depositors and other creditors of the bank.
The notes carry an annual interest rate of 1.18% above six months LIBOR up to (but excluding) 9th January 2008. Thereafter the notes carry an
annual interest rate of 2.18% above six months LIBOR. Interest is payable half yearly in arrears on 9th January and 9th July each year.
The bank may redeem all but not less than all of the notes at their principal amount on 9th January 2008 and thereafter on any following 9th January
or 9th July.
Step Up Callable Subordinated Notes 2011
The notes were issued on 16th November 2000 at a discount of 0.472%.
The notes are an unsecured obligation of the bank and in the event of the winding-up of the bank, the claims of noteholders will be subordinated
in right of payment to the claims of depositors and other creditors of the bank.
The notes carry an annual interest rate of 7.375% per annum to (but excluding) 16th November 2006, and thereafter the interest rate will be
determined by reference to the gross redemption yield on the five year benchmark gilt, and a margin of 2.5%. Interest is payable half yearly in arrears
on 16th May and 16th November.
The bank may redeem all, but not less than all of the notes at their principal amount on 16th November 2006.
No early repayment, which includes the purchase of the notes or stock by the Group for cancellation, of any of the above subordinated liabilities
can be made without the prior written agreement of the Financial Services Authority.
25. Called up share capital 2002 2001
Authorised
1,100,000,000 ordinary shares of 5p each 55.0 55.0
75,000,000 9.25% non-cumulative irredeemable preference shares
of £1 each 75.0 75.0
130.0 130.0
Issued
700,000,000 ordinary shares of 5p each 35.0 35.0
60,000,000 9.25% non-cumulative irredeemable preference shares
of £1 each 60.0 60.0
95.0 95.0
All the issued share capital has been allotted, called up and fully paid.
The preference shares carry the right to a fixed non-cumulative preferential dividend on the capital for the time being paid up, at the rate of 9.25%
per annum exclusive of any associated tax credit. The dividends are payable on 31st May and 30th November each year and take priority over
dividends to any other class of share in the capital of the bank. 25. Called up share capital (continued)
On a return of capital on a winding-up, the assets of the bank shall be applied in repaying the preference share capital in priority to any payments
to the holders of any other class of shares in the capital of the bank. The amount receivable by the holders of the preference shares shall be the
greater of the capital paid up or the average quoted price during the three months immediately preceding the date of the notice convening the
meeting to consider the resolution to wind-up.
The holders of the preference shares shall have the right to vote at a general meeting of the bank only if and when, at the date of the notice
convening the meeting, the dividend due to them has been in arrears for six months or more or if a resolution is to be proposed at the meeting
abrogating or varying their rights or privileges or for the winding-up of the bank or other return of capital and then only on that resolution.
26. Reserves The Bank Associated The Group The Bank
and subsidiary undertakings
undertakings
Share premium account at 11th January 2003
and at 12th January 2002 8.8 – 8.8 8.8
Profit and loss account at 12th January 2002 351.3* (0.7) 350.6* 336.2*
Retained profit/(loss) for the financial year 78.6 (0.4) 78.2 78.4
Profit and loss account at 11th January 2003 429.9 (1.1) 428.8 414.6
The cumulative amount of goodwill arising on the acquisition of subsidiary undertakings, net of goodwill attributed to subsidiary undertakings
disposed of, is £247,000 (2001–£247,000).
*The above analysis has been restated following the introduction of FRS 19 ‘Deferred tax’, see accounting policy (a) on page 37.
27. Miscellaneous The Group The Bank
2002 2001 2002 2001
(i) Assets and liabilities 
Denominated in sterling 8,300.6 7,418.8 8,018.4 7,165.1
Denominated in currencies other 
than sterling 387.0 407.4 387.0 407.4
Total assets 8,687.6 7,826.2 8,405.4 7,572.5
Denominated in sterling 8,301.0 7,420.9 8,018.8 7,167.2
Denominated in currencies other 
than sterling 386.6 405.3 386.6 405.3
Total liabilities 8,687.6 7,826.2 8,405.4 7,572.5
(ii) Assets subject to sale and
repurchase transactions
Debt securities – 107.4 – 107.4
(iii) Assets leased to customers
Loans and advances to customers –
Finance leases and hire purchase contracts 220.4 219.4 112.6 105.4
Assets acquired during the year 66.3 61.7 52.2 46.9
notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
56 notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
57
27. Miscellaneous (continued)
(iv) Deferred mortgage incentives Group and Bank
At 12th January 2002 0.5
Expenditure incurred in year 2.8
Transfer to profit and loss account (0.8)
At 11th January 2003 2.5
Expenditure incurred in the year is the amount that would have been charged to the profit and loss account for the year if incentives were not 
being amortised.
Interest due but not received on loans and advances in arrears has not been recognised in interest receivable where recoverability is in doubt, but
has been suspended.
28. Contingent liabilities and commitments
The tables below give, for the Group and the bank, the nominal principal amounts, credit equivalent amounts and risk weighted amounts of
contingent liabilities and commitments. The nominal principal amounts indicate the volume of business outstanding at the balance sheet date and
do not represent amounts at risk. The credit equivalent and risk weighted amounts have been calculated in accordance with the FSA guidelines
implementing the Solvency Ratio Directive on capital adequacy.
2002 2001
Credit Average Risk Risk
Contract equivalent risk weighted Contract weighted
amount amount (i) weight amount amount amount
Group:
Contingent Liabilities
Acceptances and endorsements 28.0 28.0 100.0% 28.0 37.9 37.2
Guarantees and irrevocable letters
of credit 98.3 87.9 98.1% 86.3 71.8 58.7
126.3 114.3 109.7 95.9
Bank:
Contingent Liabilities
Acceptances and endorsements 28.0 28.0 100.0% 28.0 37.9 37.2
Guarantees and irrevocable letters
of credit 98.1 87.8 98.1% 86.2 71.6 58.5
126.1 114.2 109.5 95.7
Group:
Other commitments
Documentary credits and short-term
trade-related transactions 2.9 0.6 93.9% 0.5 0.6 0.1
Undrawn formal standby facilities,
credit lines and other commitments
to lend:
1 year and over 140.1 70.1 97.1% 68.1 159.2 77.2
less than 1 year (ii) 5,213.4 – – – 4,831.3 –
5,356.4 68.6 4,991.1 77.3 28. Contingent liabilities and commitments (continued)
2002 2001
Credit Average Risk Risk
Contract equivalent risk weighted Contract weighted
amount amount (i) weight amount amount amount
Bank:
Other commitments
Documentary credits and short-term
trade-related transactions 2.9 0.6 93.9% 0.5 0.6 0.1
Undrawn formal standby facilities,
credit lines and other commitments
to lend:
1 year and over 140.1 70.1 97.1% 68.1 159.2 77.2
less than 1 year (ii) 5,210.0 – – – 4,818.2 –
5,353.0 68.6 4,978.0 77.3
Notes:
(i) Under the Solvency Ratio Directive, credit equivalent amounts, obtained by applying credit conversion factors, are risk weighted according to
counterparty.
(ii) Undrawn loan commitments which are unconditionally cancellable at any time or which have a maturity of less than one year have a risk
weighting of zero. This item consists largely of undrawn credit card facilities.
29. Derivatives and other financial instruments
The Group’s objectives and policies in managing the risks that arise in connection with the use of financial instruments are set out on pages 21 to
23 of the operating and financial review under ‘risk management’, ‘financial instruments’ and ‘derivatives’. This section in the operating and financial
review forms part of the notes to the financial statements.
(i) Risk profiles
(ia) Interest rate sensitivity gap
The table below summarises the repricing periods for the assets and liabilities in the Group’s non-trading book. Items are allocated to time bands
by reference to the earlier of the next contractual interest rate repricing date and the maturity date.
11th January 2003 Over 3 months Over 6 months Over 1 year
Within but within but within but within More than Non-interest
3 months 6 months 1 year 5 years 5 years bearing Total
Assets
Treasury bills and other eligible bills –––––––
Loans and advances to banks 1,032 1––– 7 1,040
Loans and advances to customers 2,792 141 181 1,036 264 (29) 4,385
Debt securities and equity shares 474 108 37 58 40 1 718
Other assets 278 – – – – 169 447
Loans to trading book 1,247 659 53 15 58 66 2,098
Total assets 5,823 909 271 1,109 362 214 8,688
Liabilities
Deposits by banks 746 2 1––– 749
Customer accounts 5,662 22 60 78 – 1,080 6,902
Debt securities in issue 1 1 3––– 5
Other liabilities – – – – – 301 301
Loan capital – 31 – 150 – (1) 180
Minority interests and 
shareholders’ funds – – – – 60 491 551
Total liabilities 6,409 56 64 228 60 1,871 8,688
Off balance sheet items (410) (231) 97 645 (101) –
Interest rate sensitivity gap (996) 622 304 1,526 201 (1,657)
Cumulative gap (996) (374) (70) 1,456 1,657 –
notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
58 notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
59
29. Derivatives and other financial instruments (continued)
12th January 2002 Over 3 months Over 6 months Over 1 year
Within but within but within but within More than Non-interest
3 months 6 months 1 year 5 years 5 years bearing Total
Assets
Treasury bills and other eligible bills – – – – – – –
Loans and advances to banks 676 50––– 7 733
Loans and advances to customers 2,404 210 183 897 212 (37) 3,869
Debt securities and equity shares 601 90 40 42 40 1 814
Other assets 259 – – – – 189 448
Loans to trading book 1,270 411 260 – – 21 1,962
Total assets 5,210 761 483 939 252 181 7,826
Liabilities
Deposits by banks 716 10 1 – – – 727
Customer accounts 4,965 98 26 25 – 1,002 6,116
Debt securities in issue 80 7 – – – – 87
Other liabilities – – – – – 245 245
Loan capital – 30 – 150 – (1) 179
Minority interests and 
shareholders’ funds – – – – 60 412 472
Total liabilities 5,761 145 27 175 60 1,658 7,826
Off balance sheet items (1,238) (297) 758 891 (114) –
Interest rate sensitivity gap (1,789) 319 1,214 1,655 78 (1,477)
Cumulative gap (1,789) (1,470) (256) 1,399 1,477 –
The period end position shown above is regarded as materially representative of the Group’s position throughout the year and reflects the bank
Group policies on risk management, subject to the following comments:
The gap analysis disclosed reflects contractual repricing in accordance with accounting standards.
Interest free current account balances are included in the ‘non-interest bearing’ maturity band.
The bank Group’s asset and liability policies reflect the actual stability of customer accounts.
(ib) Currency exposure
At 11th January 2003 the Group’s open position was £0.7 million (2001–£1.5 million) representing a potential loss of £0.02 million given a 
3% depreciation in sterling (2001–loss of £0.05 million).
(ic) Trading value at risk
The Group’s approach to monitoring and controlling market risk is set out on pages 21 to 23 of the operating and financial review.
At 11th January 2003, total Treasury VaR of £0.2 million (2001–£0.9 million) represents the maximum potential daily gain or loss in market rates
within a confidence level of 95% based on recent market performance. The average, highest and lowest VaR, as calculated on a daily basis, 
for the accounting period ended 11th January 2003 were £0.5 million (2001–£0.5 million), £1.3 million (2001–£1.2 million) and £0.1 million
(2001–£0.2 million).
(ii) Derivatives
The bank has entered into various off balance sheet financial instruments (derivatives) as principal either as a trading activity, which includes
proprietary transactions and customer facilitation, or as a hedging activity for the management of interest rate risk and foreign exchange rate risk.
Positive and negative fair values have not been netted as the bank does not have legal right of offset. All derivatives were held by the bank.
(iia) Derivatives held for trading purposes
The trading transactions are wholly interest rate related contracts including swaps, caps and floors, forward rate agreements and exchange traded
futures. Trading transactions include derivatives where the bank enters into a transaction to accommodate a customer together with the
corresponding hedge transaction.  29. Derivatives and other financial instruments (continued)
At the year end, the notional principal amounts and fair value of the bank’s trading derivatives were as follows:
Interest rate related transactions
2002 2001
Notional Notional
principal Fair value Fair value principal Fair value Fair value
amount asset liability amount asset liability
Interest rate swaps 7,063.0 26.8 19.3 1,412.5 5.7 5.2
Interest rate caps and floors 158.0 1.1 1.1 143.9 0.8 0.8
Futures 1,750.4 – – –––
8,971.4 27.9 20.4 1,556.4 6.5 6.0
Gains and losses on exchange traded contracts subject to daily margining requirements are settled daily. The fair value of such contracts included
above reflects the last day’s variation margin.
Maturity of over the counter trading contracts
2002 2001
Notional Notional
principal Fair value Fair value principal Fair value Fair value
amount asset liability amount asset liability
One year or less 4,342.7 13.8 10.8 1,305.0 3.2 2.9
One to five years 2,790.3 11.1 7.0 208.1 2.1 3.0
Over five years 88.0 3.0 2.6 43.3 1.2 0.1
7,221.0 27.9 20.4 1,556.4 6.5 6.0
Counterparty for over the counter trading contracts
2002 2001
Notional Notional
principal Fair value Fair value principal Fair value Fair value
amount asset liability amount asset liability
Financial institutions 7,033.0 23.5 19.3 1,403.1 4.1 4.8
Non-financial institutions 188.0 4.4 1.1 153.3 2.4 1.2
7,221.0 27.9 20.4 1,556.4 6.5 6.0
The bank had no non-margin exchange traded contracts at the year end (2001–£Nil).
(iib) Non-trading derivatives
Non-trading transactions comprise derivatives held for hedging purposes to manage the asset and liability positions in the bank. Derivatives used
to manage interest rate related positions include swaps, caps and floors, forward rate agreements and exchange traded futures. The foreign
exchange rate positions are managed using forward currency transactions and swaps.
At the year end, the notional principal amounts of the bank’s non-trading derivatives were as follows:
Interest rate related transactions
2002 2001
Notional Notional
principal Fair value Fair value principal Fair value Fair value
amount asset liability amount asset liability
Interest rate swaps 1,878.9 45.8 26.5 16,664.8 60.3 50.7
Interest rate caps and floors ––– 20.0 0.3 –
1,878.9 45.8 26.5 16,684.8 60.6 50.7
Gains and losses on exchange traded contracts subject to daily margining requirements are settled daily. The fair value of such contracts included
above reflects the last day’s variation margin.
notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
60 notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
61
29. Derivatives and other financial instruments (continued)
With the exception of the unrecognised gains/losses outlined in the following note on hedge transactions, the fair values of the non-trading
derivatives have been reflected in the profit and loss account, offset by the underlying transactions being hedged.
Maturity of over the counter interest rate related transactions
2002 2001
Notional Notional
principal Fair value Fair value principal Fair value Fair value
amount asset liability amount asset liability
One year or less 382.6 2.8 1.6 14,043.8 29.2 26.6
One to five years 1,380.2 42.5 13.1 2,496.7 31.1 14.7
Over five years 116.1 0.5 11.8 144.3 0.3 9.4
1,878.9 45.8 26.5 16,684.8 60.6 50.7
All interest rate related transaction counterparties were financial institutions.
Exchange rate related transactions
2002 2001
Financial Non-financial Financial Non-financial
Total institutions institutions Total institutions institutions
Forward currency transactions 99.9 90.6 9.3 332.6 309.2 23.4
Maturity of over the counter exchange rate related transactions
2002 2001
Notional Notional
principal Fair value Fair value principal Fair value Fair value
amount asset liability amount asset liability
One year or less 99.4 0.5 0.4 328.6 0.5 0.5
One to five years 0.5–– 4.0––
99.9 0.5 0.4 332.6 0.5 0.5
(iii) Other analysis
(iiia) Dealing losses
Dealing losses comprise the net gain or loss arising from trading transactions in securities and financial instruments but exclude any gains or losses
arising from financial fixed assets. Financial fixed assets are those assets intended for use on a continuing basis in the Group’s activities.
2002 2001
Debt securities 0.3 (4.8)
Derivatives (5.7) (1.2)
Foreign exchange 3.8 4.5
(1.6) (1.5)
(iiib) Hedges
Hedge transactions are accounted for in accordance with the accounting treatment of the underlying transaction. Accordingly, hedge gains or
losses may not be recognised at all in the financial statements or, if recognised, the gains and losses may be deferred and held on the balance
sheet. The Group had no deferred gains or losses throughout the year ended 11th January 2003. 29. Derivatives and other financial instruments (continued)
The table below sets out the unrecognised and deferred gains and losses on hedges at 11th January 2003 and the movements during the year and
the previous year.
Gains Losses Net
At 13th January 2001 18.2 (8.6) 9.6
Gains and losses arising in previous years that were recognised 
in the year ended 12th January 2002 (3.3) 1.4 (1.9)
Gains and losses arising before 13th January 2001 that were not recognised in 
the year ended 12th January 2002 14.9 (7.2) 7.7
Gains and losses arising in the year ended 12th January 2002 that were not 
recognised in the year ended 12th January 2002 22.2 (23.8) (1.6)
At 12th January 2002 37.1 (31.0) 6.1
Gains and losses arising in previous years that were recognised 
in the year ended 11th January 2003 (31.6) 27.7 (3.9)
Gains and losses arising before 12th January 2002 that were not recognised in 
the year ended 11th January 2003 5.5 (3.3) 2.2
Gains and losses arising in the year ended 11th January 2003 that were not 
recognised in the year ended 11th January 2003 33.0 (4.0) 29.0
At 11th January 2003 38.5 (7.3) 31.2
Of which
11th January 2003
Gains and losses expected to be recognised in the year ended 10th January 2004 15.4 (4.3) 11.1
Gains and losses expected to be recognised in the year ended 8th January 2005 or later 23.1 (3.0) 20.1
12th January 2002
Gains and losses expected to be recognised in the year ended 11th January 2003 31.6 (27.7) 3.9
Gains and losses expected to be recognised in the year ended 10th January 2004 or later 5.5 (3.3) 2.2
30. Fair values of financial instruments
The table below sets out a comparison of the book value and the fair value of all of the Group’s financial instruments, off balance sheet financial
instruments and other financial instruments which have an active and liquid market.
The fair value represents the amount at which the instrument would be exchanged at 11th January 2003 in an arms length transaction between
two willing parties. In the vast majority of cases, quoted market prices are readily available and are used, otherwise prices are obtained by other
well established valuation techniques, which utilise present value cash flows.
The fair value will approximate to the carrying value when instruments are carried in the balance sheet at market value or where the instruments are
short term or contain frequent repricing provisions.
2002 2001
Total Trading Non-trading Total Trading Non-trading
Carrying Fair Carrying Fair Accrued Carrying Fair Carrying Fair Accrued
Assets value value value value Interest value value value value Interest
Treasury bills and
eligible bills 18.0 18.0 – – – 1.6 1.6–––
Debt securities 2,489.8 1,760.8 729.0 744.2 42.8 2,768.1 1,937.4 830.7 845.8 47.7
Equity shares 0.9 – 0.9 0.9 – 1.3 – 1.3 1.3 –
Interest rate derivatives 35.2 27.9 7.3 45.8 70.3 30.0 6.5 23.5 60.6 187.2
Exchange rate derivatives 0.5 – 0.5 0.5 – 0.5 – 0.5 0.5 –
2,544.4 1,806.7 737.7 791.4 113.1 2,801.5 1,945.5 856.0 908.2 234.9
notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
62 notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
63
30. Fair values of financial instruments (continued)
2002 2001
Total Trading Non-trading Total Trading Non-trading
Carrying Fair Carrying Fair Accrued Carrying Fair Carrying Fair Accrued
Liabilities value value value value Interest value value value value Interest
Debt securities in issue 5.0 – 5.0 5.0 0.1 87.5 – 87.5 87.5 0.8
Non-equity shareholders’
funds 60.0 – 60.0 79.8 0.7 60.0 – 60.0 82.3 0.7
Interest rate derivatives 39.6 20.4 19.2 26.5 49.5 25.7 6.0 19.7 50.7 156.6
Exchange rate derivatives 0.4 – 0.4 0.4 – 0.5 – 0.5 0.5 –
105.0 20.4 84.6 111.7 50.3 173.7 6.0 167.7 221.0 158.1
The fair values and carrying values shown above exclude accrued interest.
31. Consolidated cash flow statement 2002 2001
Reconciliation of Group operating profit
to net cash (outflow)/inflow from operating activities
Group operating profit 122.5 107.5
Decrease in prepayments and accrued income 2.8 36.5
Increase in accruals and deferred income 8.8 14.4
Interest payable in respect of subordinated liabilities 13.9 14.4
Effect of exchange rate movements (3.8) (4.5)
Provisions for bad and doubtful debts 70.1 66.2
Depreciation 20.1 22.1
Amortisation of investments 0.5 0.2
Profit on sale of investments (7.0) (6.8)
Profit on disposal of Fixed Assets (0.1) –
Net cash flow from trading activities 227.8 250.0
Increase/(Decrease) in deposits by banks 34.7 (21.4)
Increase in customer accounts 786.2 929.5
(Decrease)/Increase in debt securities in issue (82.5) 33.4
Increase in loans and advances to banks (557.8) (153.5)
Increase in loans and advances to customers (585.6) (571.7)
Decrease/(Increase) in trading debt securities 176.6 (358.0)
(Increase)/Decrease in treasury and eligible bills (16.4) 54.0
Net movement of other assets and other liabilities 14.4 11.9
Net increase in cheques in course of collection (22.6) (29.6)
Net cash (outflow)/inflow from operating activities (25.2) 144.6
Analysis of the balances of cash Loans and
advances to
Cash and banks
balances at repayable on
central banks demand Total
At 13th January 2001 61.7 1.2 62.9
Change in year 52.0 (0.9) 51.1
At 12th January 2002 113.7 0.3 114.0
Change in year (16.2) – (16.2)
At 11th January 2003 97.5 0.3 97.8
The Group is required to maintain balances with the Bank of England which at 11th January 2003 amounted to £5.6 million (2001–£5.4 million).
This item is included on the balance sheet as a part of loans and advances to banks. 32. Segmental analysis
The Group’s activities have been segmented between retail banking, other financial services (mainly leasing, advisory services and correspondent
banking) and Unity Trust group.
2002 2001
Profit before taxation:
Retail banking 216.5 197.0
Other financial services 2.1 0.4
218.6 197.4
Shared costs:
Centralised services and processing (55.4) (51.8)
Management services and marketing (44.9) (41.4)
Profit before Unity Trust group and associates 118.3 104.2
Unity Trust group and associates 4.2 3.3
Profit before taxation 122.5 107.5
Gross assets:
Retail banking 7,830.1 7,017.8
Other financial services 253.2 249.6
Unity Trust group 263.4 234.5
Group central assets 340.9 324.3
Total 8,687.6 7,826.2
Net assets:
Retail banking 478.0 409.7
Other financial services 13.2 7.7
Unity Trust group 25.8 23.8
Group central net assets 34.5 30.6
Total 551.5 471.8
Net assets are share capital, reserves and minority interest.
Costs which can be directly attributable to retail banking and other financial services have been allocated to these areas to determine the profit
before taxation for these segments.
The figures for 2001 have been restated to reflect the change in accounting policy due to the adoption of FRS19 (see page 37).
33. Directors’ and officers’ loans
The aggregate amounts outstanding at 11th January 2003 under transactions, arrangements and agreements made by authorised institutions
within the Group with those who were Directors (including connected persons) or officers of The Co-operative Bank p.l.c. during the year, and the
number of persons concerned, were as follows:
Aggregate Number
amount of persons
outstanding
Directors
loans £223,060 3
quasi-loans £28,407 13
Officers
loans £910,930 26
quasi-loans £64,569 33
notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
64 notes to the financial statements
The Co-operative Bank p.l.c.
all amounts are stated in £m unless otherwise indicated
65
34. General 2002 2001
Land and Land and
buildings buildings
(i) Operating lease commitments
At the year end, annual commitments under non-cancellable
operating leases were:
Group
Expiring:
within one year 0.7 0.7
between one and five years 1.7 1.5
in five years or more 7.9 9.2
10.3 11.4
Bank
Expiring:
within one year 0.7 0.7
between one and five years 1.7 1.5
in five years or more 8.4 8.7
10.8 10.9
(ii) Average number of employees
The average number of persons employed by the Group during the year was made up as follows:
2002 2001
Full time 3,263 3,179
Part time 898 888
4,161 4,067
(iii) Concentration of exposure
The Group’s exposure is virtually all within the United Kingdom. The following industry concentrations of gross advances before provisions and
suspended interest are considered significant.
2002 2001
Distribution, transport and hotels 504.7 501.1
Business and other services 1,393.1 1,306.9
Personal 2,557.4 1,980.6
(iv) Related parties
As the bank is a 100% owned subsidiary of Co-operative Financial Services Limited, which itself is a 100% owned subsidiary of Co-operative Group
(CWS) Limited, the bank has taken advantage of the exemption contained in FRS 8 and has therefore not disclosed transactions or balances with
entities which form part of that Group (or investees of the Group qualifying as related parties).
Transactions with other related parties as defined by FRS 8 have not been disclosed because they are considered to have taken place in the normal
course of banking business and as such are covered by banking confidentiality rules.
The consolidated financial statements of Co-operative Group (CWS) Limited within which the bank is included can be obtained from the address
given in note 16. Cleared Balances 1998 1999 2000 2001 2002 Change Change
£m £m £m £m £m £m %
Retail Lending
Personal sector
Visa 718 816 778 774 843 69 9
Other 787 890 984 1,116 1,362 246 22
Corporate sector 1,126 1,164 1,296 1,653 1,740 87 5
Total 2,631 2,870 3,058 3,543 3,945 402 11
Wholesale Placements
Debt securities 2,022 2,225 2,543 2,898 2,870 (28) (1)
Wholesale lending 469 525 595 739 945 206 28
Other assets 94 95 114 158 198 40 25
Total Assets 5,216 5,715 6,310 7,338 7,958 620 8
Retail Deposits
Personal sector 1,889 2,059 2,476 3,166 3,673 507 16
Corporate sector 1,280 1,445 1,476 1,721 1,805 84 5
Total 3,169 3,504 3,952 4,887 5,478 591 12
Wholesale Deposits 1,497 1,584 1,685 1,688 1,645 (43) (3)
Other liabilities 100* 135* 128* 163* 163 ––
Subordinated debt 199 192 188 179 179 ––
Preference shares 60 60 60 60 60 ––
Equity share capital, reserves 191* 240* 297* 361* 433 72 20
Total Liabilities 5,216 5,715 6,310 7,338 7,958 620 8
% Growth in retail deposits
(year on year) 10 11 13 24 12
Retail deposits
% retail loans 120 122 129 138 139
Risk Asset Ratio % (at year end)
Total 12.9 13.0 13.7 13.7 14.1
Tier 1 7.8 8.6 9.4 9.9 10.6
*Restated (see page 37)
summarised average balance sheet
The Co-operative Bank p.l.c.
66 67
consolidated profit and loss account history
The Co-operative Bank p.l.c.
1998 1999 2000 2001 2002 Change Change
£m £m £m £m £m £m %
Net interest income 241.0 278.5 294.1 313.5 329.6 16.1 5.1
Non-interest income 113.4 124.8 134.9 142.1 153.8 11.7 8.2
Operating income 354.4 403.3 429.0 455.6 483.4 27.8 6.1
Operating costs (241.0) (261.7) (272.9) (281.9) (290.8) (8.9) 3.2
Profit before bad debts 113.4 141.6 156.1 173.7 192.6 18.9 10.9
Provisions for bad debts (41.6) (53.3) (59.9) (66.2) (70.1) (3.9) 5.9
Operating profit 71.8 88.3 96.2 107.5 122.5 15.0 14.0
Associated undertakings
and exceptional items 1.8 0.3 0.1 – – ––
Profit before taxation 73.6 88.6 96.3 107.5 122.5 15.0 14.0
Taxation (22.8) (27.5) (29.8) (31.7) (36.6) (4.9) 15.5
Profit after taxation 50.8 61.1 66.5 75.8 85.9 10.1 13.3
Minority interests (0.9) (1.4) (1.7) (1.8) (2.2) (0.4) 22.2
Dividends (5.5) (5.5) (5.6) (5.5) (5.5) ––
Retentions 44.4 54.2 59.2 68.5 78.2 9.7 14.2
Average numbers of staff 4,049 4,010 4,100 4,067 4,161
Net interest margin % 4.7 5.0 4.8 4.4 4.2
Cost/income ratio % 68.0 64.9 63.6 61.9 60.2
Return on opening equity
shareholder’s funds % 26.4* 25.5* 22.2* 21.0* 19.8
Earnings per share 6.34 p 7.75 p 8.46 p 9.79p 11.17p
*Restated (see page 37) 68
1998 1999 2000 2001 2002
£m £m £m £m £m
Equity share capital 35.0 35.0 35.0 35.0 35.0
Reserves 177.5* 231.7* 290.9* 359.4* 437.6
Preference shares 60.0 60.0 60.0 60.0 60.0
Shareholders’ funds 272.5* 326.7* 385.9* 454.4* 532.6
Minority interests 8.9 15.2 16.3 17.4 18.9
Subordinated liabilities 198.1 192.9 179.1 179.4 179.6
Debt securities in issue 56.8 62.4 54.1 87.5 5.0
Deposits by banks 599.0 912.3 750.4 727.3 748.5
Deposits by customers 4,196.2 4,533.0 5,186.3 6,115.8 6,902.0
Other liabilities 207.9* 191.3* 216.2* 244.4* 301.0
5,539.4 6,233.8 6,788.3 7,826.2 8,687.6
Tangible fixed assets 60.8 64.7 69.2 67.3 78.4
Loans and advances to banks 431.3 493.9 580.6 733.2 1,291.0
Loans and advances to customers 2,784.0 2,978.1 3,363.7 3,869.2 4,384.6
Debt securities and bills 1,978.4 2,375.6 2,417.2 2,751.0 2,496.1
Cash, balances at central banks and 
items in the course of collection from
other banks 152.9 210.1 178.6 259.3 262.7
Other assets 132.0 111.4 179.0 146.2 174.8
5,539.4 6,233.8 6,788.3 7,826.2 8,687.6
*Restated (see page 37)
consolidated balance sheet history
The Co-operative Bank p.l.c. 69
notice of annual general meeting
The Co-operative Bank p.l.c.
NOTICE IS HEREBY GIVEN that the Annual General Meeting of The Co-operative Bank p.l.c. will be held at The Board Room, 24th Floor,
CIS Tower, Miller Street, Manchester M60 0AL on Friday, 16th May 2003 at 1.30 p.m. for the following purposes:
1. To receive the Notice convening the meeting.
2. To receive the Chairman’s Statement, the Chief Executive’s Overview, the Operating and Financial Review, the Report of the Directors,
the Corporate Governance Report, the Remuneration Report and to adopt the Financial Statements for the year ended 
11th January, 2003 together with the Auditor’s Report thereon.
3. To accept the following recommendations of the Board:
(a) Non-cumulative Irredeemable Preference Shares
(i) That the payment of a dividend of 4.625p per £1 share on 29th November, 2002 be confirmed; and
(ii) that a dividend of 4.625p per £1 share be declared and paid on 30th May, 2003 to the registered holders as at 2nd May 2003
providing a dividend rate of 9.25 per cent per annum and making a total distribution of £5,550,000.
(b) Ordinary Shares
That no dividend on ordinary shares be paid.
4. (a) To re-elect the following Directors who retire by rotation, in accordance with the provisions of Article 105:
(i) W.J. Marper, Executive Director
(ii) K.W. Darwin, Chairman, Co-operative Financial Services Limited
(iii) G.R. Bennett, Chief Executive, Southern Co-operatives Limited
(b) To re-elect the following Directors who were appointed since the date of the last Annual General Meeting
(i) S.J. Butler, Chairman, Co-operative Insurance Society Limited
(ii) B.P. Glover, Executive Director, Corporate and Business Banking
(iii) R.T. Goddard, Executive Director, Finance and Risk
(iv) G.H. Stow, Chairman, Building Societies Association
(v) P.J. Sutcliffe, Executive Director, Retail Banking, Business Management
5. That KPMG Audit Plc be and are hereby appointed auditor of the Company, to hold office from the conclusion of this meeting until the
conclusion of the next General Meeting at which accounts are laid before the Company, at a remuneration to be fixed by the Directors.
Registered Office: Registrar:
1 Balloon Street Computershare Investor Services PLC
Manchester M60 4EP P.O. Box 82
Reg. No. 990937 (England) The Pavilions
Bridgwater Road
By Order of the Board Bristol BS99 7NH
M. A. Lees, Tel: 0870 702 0003
Secretary
10th April, 2003
A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote on his/her behalf. 
A proxy need not also be a member. Further information on Preference Shareholders’ voting rights is given below.
Members should note that to attend the meeting their shareholding must be registered on the register of the Company not later than 
5.00 p.m. on 30th April 2003. This applies to shares held in uncertificated forms in CREST and to shares held in certificated form.
Preference Shareholders – Extract from Articles of Association 4(B)(c)
Voting and General Meetings
(i) The holders of the Preference Shares shall be entitled to receive notice of and to attend (either in person or by proxy) all General
Meetings of the Company. The holders of the Preference Shares shall have the right to speak and vote at a General Meeting of the
Company only if and when, at the date of the notice convening such meeting, the fixed preferential dividend payable to them
respectively has been made in arrears for six months or more after any date fixed for payment thereof, or if a resolution is to be
proposed at such meeting abrogating or varying any of the respective rights or privileges attaching to their shareholding or for the
winding-up of the Company or other return of capital and then on such resolution only.
(ii) Whenever the holders of the Preference Shares are entitled to vote at a General Meeting of the Company upon any resolution proposed
at such meeting, on a show of hands every holder who (being an individual) is present in person or (being a corporation) 
is present by a representative or by proxy shall have one vote and, on a poll, shall have one vote in respect of each Preference Share
registered in the name of such holder.
Printed on 80% recycled fibre using a totally chlorine-free process.
Designed and produced by The Rothwell Company Limited, Manchester. THE CO-OPERATIVE BANK p.l.c., HEAD OFFICE, 1 BALLOON STREET, MANCHESTER M60 4EP.
www.co-operativebank.co.uk
The Co-operative Bank p.l.c. Financial Statements 2002