Credit unions win bank support

Plans to create a "central services" function for credit unions will be presented to the government next month by a consortium led by Co-operative Bank.

Along with Royal Bank of Scotland and Abcul, the lobby group for credit unions, the plan is likely to build in some government funding as well as backing from rival banks.

Creating a central services function, which would help credit unions with their administration, the banks would be striving towards one of the goals set out by the the government to foster further development of credit unions and tackle social exclusion, said Mervyn Pedelty, chief executive of Co-op Bank.

Co-op, which prides itself on an ethical stance, already provides banking facilities to 60% of the country's credit unions and is working at setting up basic bank accounts for the socially excluded.

Reporting a 20% rise in pre-tax profits to £88.6m, Co-op plans to unveil an "exciting" range of mortgage products with an "ecological edge" in the summer.

The bank said it had already attracted 120,000 customers for its Smile internet bank since its launch six months ago. That helped contribute to a 14% rise in new customer accounts during the year.

Mr Pedelty said the bank was continuing with its plans to install cash machines, which customers can use without a charge, in the convenience stores run by the Co-operative Wholesale Society.