The policy was introduced in 1992 and incorporated into the bank's constitution in 2013, then revised and expanded in 2015 in line with over 320,000 customer responses to a poll.

In 2013–2014, after a merger with Leek-based Britannia Building Society, a failed attempt to buy a larger rival and a troubled commercial property loan portfolio, the bank was the subject of a rescue plan to address a capital shortfall of about £1.9 billion.

Following restructuring and the formation of a new holding company on 1 September 2017, the Co-operative Group no longer had a stake in the bank and the relationship agreement between the two organisations ended in 2020.

The purchase was publicly announced in July 2012 and it was revealed that the branches would be initially split from Lloyds under the resurrected TSB brand.

[8] The Financial Times had previously reported that the Co-operative would require a £1 billion increase in capital to support enlarging the bank.

In May Moody's downgraded its credit rating by six notches to junk (Ba3) resulting in the chief executive Barry Tootell's resignation.

[13] A press release[14] by the bank issued on 17 June 2013 explained that the scheme would compel subordinated (also known as junior) bondholders to convert some or all of their assets from debt instruments to ownership ("equity") shares of uncertain value which would be listed on the London Stock Exchange and a new fixed income instrument.

The scheme contrasted with the rescues of other British banks in 2008 and 2009 when central government introduced new capital into the failed institutions.

[28][29] The Co-operative Bank lost 38,000 current account customers in the first half of 2014 after suffering what it called a "hurricane of negative publicity" following the lender's near collapse.

[33] Nevertheless, the bank reported progress in its rehabilitation, as its losses sharply narrowed and it strengthened its capital position.

[39] The narrowing of losses was driven largely by a faster-than-expected reduction in unwanted assets, including significant parts of the portfolio of sub-prime mortgages the bank inherited from its merger with Britannia Building Society.

[40] In August 2014 the bank said it had cut staff numbers by 21 percent (about 1,560 workers) in the previous year and that there were more job losses to come.

This was partly due to a 28% drop in in-branch transactions resulting from a change in demand from branch to internet banking.

He said that there had been "no meaningful discussions" concerning the suggestion that the hedge funds which own 80% of the bank's equity were looking at buying up the Co-operative Group's remaining 20% holding.

They said that they were also considering options other than a sale to build capital, including raising cash from new and existing investors.

[33] It was then announced that institutional bondholders had agreed to convert £426 million of bonds into equity, which would give them a 17 per cent stake in the bank.

Additionally, it was announced that existing investors had agreed to put £250 million of new equity into a newly established holding company, which would take a 68 per cent stake in the bank.

[73] On 19 April 2024, Coventry Building Society agreed takeover terms for the bank, worth up to £780 million.

[74] On 24 May 2024, Coventry Building Society finalised its takeover of the bank, and announced that it would not be giving its members a vote on the deal.

These include a commitment not to finance "the manufacture or transfer of armaments to oppressive regimes" or "any business whose core activity contributes to global climate change, via the extraction or production of fossil fuels".

Nevertheless, this business received criticism in 2009 for not following the bank's Ethical Policy[88][89] and in 2013 it was sold to the Royal London Group.

[92] Gay Times subsequently selected the Co-operative Bank for its Ethical Corporate Stance Award.

[94] The expanded Ethical Policy, updated in 2015, is built on five pillars: Banking, Workplace, Products and Services, Campaigning and Business.

[citation needed] In October 2008, it was reported that Co-operative Financial Services was in talks with Britannia Building Society with a view to sharing facilities and possibly a full merger.

[102] In the short term, both Britannia Building Society and the Co-operative Bank continued operating their own products, branch networks and systems.

All Britannia branches were due to be rebranded under the Co-operative name by the end of 2013, but this was abandoned in the wake of the financial crisis, with a great many simply closing and only a smaller number being retained and converted.

[103] In June 2013, a member of the Treasury Select Committee criticised Richardson – who had left the bank in 2011 – over his role in the merger.

It subsequently emerged that the service crashed when more than 130 users logged on simultaneously, and some business customers were left unable to access their accounts for days.

[107] In 2011, some Co-operative Bank customers were left temporarily unable to use their debit cards as a result of IT problems.

[citation needed] On 17 November 2013, Labour Party advisor and the former Co-operative Bank chairman, Rev.