Co-op Bank to test the people's cash machine

THE CO-OPERATIVE BANK is planning to install cash dispensers in Co-op stores in a move to bring its services within reach of "unbanked" people left high and dry by the high street banks' concentration on high turnover locations in city centres and shopping malls.

The Government has made the reintroduction of basic infrastructure in sink estates a priority as part of its policy to combat social exclusion.

A pilot scheme covering 16 Co-op stores in the North-west and Leeds is under way. If it is successful, the machines could be installed at hundreds of Co-op stores in deprived areas around the country.

The bank's chief executive, Mervyn Pedelty, says the scheme, which follows the Co-op's recent link with Post Office Counters, grew out of discussions between the various parts of the Co-op movement on how Co-op stores could be used to market Co-op financial services more effectively to their customers.

The move runs counter to the trend elsewhere in the banking industry in which waves of bank branch closures have left large parts of the country without easy access to basic banking services.

The C-op Bank, which now has 2 per cent of current accounts and 5 per cent of credit-card balances in the UK, is now seriously considering an entry to the mortgage market.

Half-year pre-tax profits rose to pounds 40.2m from pounds 33m last year.

Mr Pedelty, who took over as chief executive last year, said the bank's ethical stance was continuing to win business, particularly among the better-off who make up the bulk of Co-op customers.

He said the bank was now too large to be regarded as a niche player. However, he believed that, with its investment in Internet banking, there was enough scope for the bank to grow organically and develop new business areas without succumbing to pressure to buy growth through acquisition.

The aggressive targeting of personal business paid off with a 15 per cent rise in the value of personal loans to pounds 2.57bn, the bank announced. Deposits were up by 9 per cent to pounds 3bn.

Bad debt provisions were up by 5 per cent to pounds 18.5m, reflecting the expansion of personal loans. The cost income ratio, traditionally a weaker area, improved by 4 percentage points to 68 per cent.

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