Corporate and
business customers

Commentary

Context The bank has 44,000 corporate and business banking customers and 92,000 corporate and business banking accounts. The bank has its main Corporate Banking Centre in Manchester, and a network of ten regional business centres covering England, Scotland and Wales. The bank has reported satisfaction amongst corporate and business customers since 2000. At the end of 2003, CIS provided approximately 150,000 policies to a range of businesses. The commercial motor product (106,000 policies) and the commercial combined product (33,000 policies) account for the vast majority of CIS' corporate and business custom. The relationship between commercial customers and CIS is more analogous to the relationship between personal customers and CIS. Customer satisfaction research for Personal Customers is described here.

Social inclusion The bank discloses its support for small businesses in deprived areas and benchmarks this against the 'Industry Average'. All banks with significant exposure in the UK small business market must disclose such data to the Bank of England, where it is analysed and published in aggregate form. As at February 2004, The Co-operative Bank was one of only three banks to voluntarily disclose their individual performance, despite repeated requests from HM Treasury. In 2003, the bank made adjustments to its reporting and record-keeping systems, in order that 'small businesses' could be more accurately identified. These changes may have produced the marked increase seen in the declared levels of support for small businesses in deprived areas (e.g., the percentage of loans by volume in deprived areas in 2003 was 7.34%, cf. 2002: 3.95%). The bank has explained these developments to the satisfaction of the Bank of England. The bank has developed partnerships with a number of Community Development Finance Initiatives (CDFIs),i which provide capital and support to enable individuals or organisations to develop and create wealth in disadvantaged communities or under-served markets. To date, the bank has agreed subsidised lending to CDFIs of £2.5million, and loans of £2million were agreed in 2003.ii Although this sum is less than 1% of bank business loans and advances, the bank believes that it may still be the largest commitment of any UK retail bank to CDFIs.  The bank's profile in deprived areas continues to indicate that it has more current and deposit accounts and higher loan and overdraft balances than the banking average. This can be partially explained by the location of the bank's corporate business centres, which tend to be concentrated in metropolitan areas.

Corporate and business banking analysis The bank's Ethical Policy stipulates who the bank will and will not finance, as directed by customers. It covers all of the bank's assets (e.g., retail and syndicated loans and corporate leasing) and liabilities (e.g., retail deposits and savings and treasury dealings), and the investment of all retained balances. The bank has previously provided a detailed annual breakdown of all instances where business has been declined as a result of its Ethical Policy. Follow this link for details of Ethical Policy Screening. For the first time this year, an ethical and sustainability analysis is provided  of the bank's Corporate and Business Banking lending and deposits balance sheet. This is designed to assess the extent to which the bank's products and services support organisations that, in the bank's view, make a particularly positive contribution to society. Analysis shows that 47% of the bank's deposits and 24% of lending balances are now derived from business activities that have a distinct co-operative, ethical or sustainability purpose.

Customer satisfaction The Co-operative Bank undertakes annual satisfaction research amongst a sample of corporate and business customers. There has been a small decline in overall customer satisfaction during 2003. This may be partially attributed to the introduction of more comprehensive processes for changes to account signatories, in response to industry requirements. 68% of customers rate the bank as 'excellent' or 'good' (2002: 73%), and 93% of customers say that their expectations of service have been met (2002: 94%). 74% of customers would recommend the bank (2002: 80%) and 92% of customers would consider the bank for an additional business account (2002: 94%). There has been a decline in satisfaction with those attributes of performance that broadly relate to customers' relationship with the bank - down 19 percentage points to 61%. In 2003, the relationship score has been calculated on the basis of different drivers, including 'the bank makes an effort to understand business issues', which emerged as a greater priority issue for customers during the year. Lower satisfaction was recorded for this measure than for relationship attributes in prior years, and this substantially contributed to the decline in customer satisfaction. Despite a small decline in 2003 (four percentage points), customer satisfaction with the bank's ethical and sustainability performance remains high at 86%. 

Complaints The bank was the first UK high street bank to provide all business banking customers with service level guarantees across a range of routine banking activities; where the bank fails, it apologises and pays £25 in compensation. The bank's Corporate Customer Service centre received a total of 735 written complaints in 2003. 71 complaints that could not be resolved by the individual business unit    were referred to the Customer Care team (2002: 58). Of these, nine were issued with 'Final Responses' - enabling the customer to refer the complaint to the Financial Ombudsman Service. During 2003, CIS handled 58 complaints relating to its commercial combined policy and 162 complaints relating to its commercial motor policy.

Network developments There were no changes to the bank's business centre network in 2003. Changes to CIS' network of district offices are described here.

New products A new business banking current account - 'Clarity' - was launched in March 2004. This seeks to meet the needs of customers who have some complex banking requirements, but who do not require the degree of individual support offered by the bank's Partnership Banking service. Clarity offers customers a full range of banking services, a telephone based dedicated relationship management team (on hand to deal with more complex enquiries), a fixed-fee pricing structure and a range of added value services. A tailored business banking package for members of the Federation of Small Businesses (FSB) was also launched in March 2004 at the FSB's Annual Conference. 'FSB Business Banking' provides a package of business banking benefits for FSB Members. These include a current account which offers 18 months free banking and a £25 annual loyalty bonus; a business Visa charge card offering up to 38 days interest free credit and no charges; discounted fixed rate business loans of up to £25,000; and direct personal loans for FSB Members and their employees.

Industry codes  The bank subscribes to the Business Banking Code. In 2003, the Banking Code Standards Board carried out a monitoring review, which confirmed satisfactory compliance with the Business Banking Code's requirements. CIS subscribes to the General Insurance Standards Council's Commercial Customer Code.

Sustainability value analysis

The bank has conducted detailed research with business customers to gain a better understanding of the importance of the bank's ethical and sustainability policies in attracting and retaining their custom. The results indicate that for 22% of customers the bank's ethical and sustainability policies are the most important reason for opening and maintaining an account (2002: 26%). 40% of all customers indicate that ethical and sustainability policies were one of the important factors that influenced them to open and maintain an account with the bank (2002: 40%). The research also indicated that ethically motivated customers are more likely to recommend the bank and are more likely to consider the bank for additional business accounts. An estimate of the total profitability contribution attributable to ethically motivated customers is shown here.

Influence and action

SME finance CFS responded to HM Treasury's consultation document "SMEs: Bridging the Finance Gap". An overview was provided of the bank's ongoing support for SMEs. In addition, the response clarified CFS' support for the concept of Mutual Guarantee Societies, which, although widely accepted on mainland Europe as a means through which small businesses can raise capital, have yet to find favour with UK financial authorities.

i www.cdfa.org.uk
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ii Included loans to Industrial Common Ownership Finance (ICOF), Charity Bank, Bolton Business Ventures and the North West Community Loan Development Fund.