More information is continually emerging about both stories that I’ve been following. Tonight (Monday) the Basque broadcaster EiTB is doing a Fagor news marathon of sorts, so I’m going to hold off and post more on that in the near future; meanwhile here is a list of their coverage while I focus on news in the UK.
Even though the prospectus for the Co-operative Bank’s restructuring has been delayed for a week, Co-operative News and The Guardian both have quite a bit of writing – this is big news in Britain.
Co-operative News has cranked out a half-dozen stories today alone, including some good commentary by people much closer to the action than myself. So rather than popping off my own opinion piece I’m going to continue to flag what seem to me like the most important opinions offered by others – mainly people with direct connections to the Co-operative Group.
There has been no shortage of comment from Peter Marks, the former Co-operative Group director who has been grilled by a parliamentary commission. He provides some insight into what leadership was thinking: It appears that the ill-fated attempt to acquire hundreds of Lloyds branches was an attempt to deal with a capital shortage, which he attributes to the Group being spread too thin due to its multiple business lines and ponderous governance.
Co-operatives UK Secretary General Ed Mayo warned that it will be important to protect the cooperative identity from a serious potential threat at the hands of the bank’s new owners. He wrote, “We have already indicated that if we believe that it is not a co-operative, then we would argue vigorously for a review of the name.”
Co-op lawyer Ian Snaith also issued a challenge based on the bank’s name , noting that, “The irony of this story is that the new owners of the Bank want to use the name to ensure that they maximise their profit from the ownership of the bank by keeping its ethical image.”
I should mention that when I was in the MMCCU program at St. Mary’s a few years back, we had an extensive and ongoing struggle with this issue: Organic, ethical and sustainable as branding concepts are all now subject to horrible distortions; perhaps this battle is already lost. We hoped that cooperatives might – by virtue of legal definition as something under cooperative governance – avoid this path of dilution and meaninglessness. I’m glad to see that our British colleagues are getting ready to defend the good name.
In addition to these views from the top, a trio of elected regional representatives to the Co-op’s multi-tiered democracy have offered their thoughts. I think these are particularly useful perspectives, lying somewhere between the average member (who generally has a limited understanding of even simple consumer co-ops let alone something as complicated as the Co-operative Group) and the systemwide leadership (who might be too close to the problem).
Jennifer Lee of Kelsall wrote, “Co-operation is not an efficient, cost minimising, opportunity maximizing method of doing business. It is messy and frustrating and sometimes slow. Yet it depends upon each of us believing that, for all of its flaws, co-operation is nevertheless a better way of doing business.”
And Dave Boyle of Brighton offered, “The end of the bank as a meaningful co-operative enterprise should…be a prompt for a thorough reassessment what we mean by membership, accountability and democracy in a mass scale enterprise. We should start by recognising that the part of the business with least openness and transparency was the worst governed and worse run and build from there.”
Meanwhile at The Guardian, there were a few especially interesting stories as part of their ongoing coverage:
Heather Stewart used this opportunity to reflect on how “Britain’s banking landscape is a bleak, windswept monoculture” and argues for development of the banking “undergrowth.” I appreciate this biological imagery, as I have previously written about how our economy resembles an old growth forest, in a bad way.
The bank’s new owners – led by a pair of US hedge funds – have issued a statement reassuring customers how important it is to them that the “bank maintains its unique characteristics and ethos.” How sweet. I imagine that’s why they demutualized the thing in the first place, to protect its cooperative characteristics.
But more seriously, a trio of writers view this as a huge blow to the vision of the original Rochdale Pioneers, and worry that with this troubling development the “future of the co-operative movement they founded was called into question.”
It isn’t just The Guardian writing about this story. From the Mail, it seems that a dozen major charities are set to demand that the bank stick to principles or they will jump ship, taking their credit card schemes and membership bases with them; the bank might then be “dead in the water.”
Finally, it is some modest consolation that this unfortunate episode serves as a case study for how to proactively resolve a troubled bank. The Financial Times has a strangely appreciative piece taking “inspiration” and acknowledging the lessons learned having broad application despite this bank’s peculiar structure; this seems to suggest that despite the cooperative movement’s internal soul searching, this episode might at least not be seen externally as more evidence that co-ops don’t work.
I do want to offer one opinion about this still-unfolding story, and that is we should be keeping an eye on leadership changes, both inbound and outbound. For the former, we have the appointment of Bill Thomas, a former SVP at HP Enterprise Services; I realize that the bank’s many challenges include some big IT issues (most notably from its serious difficulty merging with Britannia), but this reminds me a little too much of some technocrat being foisted on Greece by the European Union.
But perhaps more disturbing is a report from The Guardian that “Neville Richardson, the former boss of the struggling Co-op Bank, has landed a new job working in commercial property – a sector partly blamed for the near collapse of the mutual’s banking arm.” Certainly he has a right to pursue new employment and it is not surprising that he has some expertise in an industry that caused problems for his old firm. Indeed, one hopes that he would know a thing or two about real estate. In any case I’m not going to blame him for clamming up after playing a role in a major bank collapse.
However, there is a funny smell to the move and The Guardian’s story ends with this: “A spokesman for Richardson referred all queries about his job to JSSH. A spokesman for JSSH referred all queries to Richardson.” The lack of transparency is not becoming and we need more information to sort out this mess, not less.