This might seem counter-intuitive but handing the Co-operative Bank over to a bunch of rapacious hedge funds might just be the best way to preserve the much vaunted ethical and customer focused ethos that its 4.5 million customers are worried about it losing.
Just how worried could be seen on its Twitter feed as the final deal to rescue the bank was announced. Among a certain amount of ribald abuse – ethical me a*** (sic) and suchlike – were queries from people who are genuinely worried about the future of an institution they saw as providing a sliver of safe ground in the midst of a swamp.
That this appears to have been a mirage is not down to the hedge funds, however. It’s thanks to the marsh gas vented by cavalier managers. It’s their will o’ the wisp lights that customers – some of whom became investors through buying its bonds – followed down the same treacherous paths mapped out by so many banks.
No wonder they are sceptical now they are being asked to trust hedge funds, of all people, to act as the guardians of what they thought this bank represented when they joined, despite those funds signing up to a new constitution that in theory enshrines Co-op’s values.
That scepticism was given another boost yesterday with the news that branches and jobs are to be closed, which speaks to a narrative that has the hedge funds as the wolves of the City, howling with triumph as they pick over the carcass of the one financial institution that did things differently.
Except that it might be wrong.
For a start, the cuts aren’t being made at the behest of the hedge funds. Co-op has a cost-to-income ratio of an astonishing 86 per cent. In contrast Lloyds stands at 51 per cent, 68 per cent if impairments are included.
With a stack of bad loans on its books, and a weak capital base, that’s simply unsustainable. It wouldn’t be sustainable for any institution. The cost-cutting is deeply regrettable, but necessary.
As for the future, and the future of Co-op’s ethics now that the Co-operative Group has ceded control to the City, here’s the point. The one certainty Co-op’s customers can be sure of when it comes to the way hedge funds operate is that they will act in a way that maximises the commercial benefit for them in any transaction in which they are involved.
They will be well aware that without the Co-op’s “values” there is little reason for this bank to exist. It is a subscale, financially crippled institution which would struggle to compete with the TSBs and the Virgin Moneys of this world, let alone Barclays or Lloyds or HSBC, without something to make it stand out from the pack.
It only exists right now because of the remarkable loyalty displayed by the bank’s 4.5 million customers who joined the bank because of its ethical stance.
The hedge funds are well aware of this and they aren’t stupid enough to put it to the test in the way that the previous managers of the Co-op have.
It should also be noted that their intervention has played a role in securing a better deal for retail bondholders, although the real credit for that goes to Mark Taber, who led a remarkably successful fight on their behalf and is one of the few actors in this drama to emerge smelling of roses.
How we all love to hate O’Leary’s Ryanair
Schadenfreude translates as shameful joy. But is it even shameful to have a chuckle at the expense of Ryanair in the wake of its second profit warning in two months?
Not that this would bother the airline’s ever combative chief executive, Michael O’Leary. This was the Michael O’Leary we’ve grown to know and, erm, love in a typically bumptious TV appearance denying that the company has any issues at all yesterday.
But his bombast and claims that Ryanair is at its best when competition is hot and fares are rock bottom as a result, can’t hide the fact that his company has shaved €50m (£42m) from its forecast earnings. It will now show a fall in full-year profits for the first time in half a decade.
That is what will raise a wry chuckle from some of those who have found themselves on the wrong side of Ryanair’s extra charges that inevitably end up getting tacked on to its fares.
Those charges will have affected just about anyone who isn’t a teenager or early twentysomething with the right kind of debit card, who is happy to travel with just a carry-on bag and doesn’t mind spending several hours hitch-hiking to the city centre from some of the more obscure airports Ryanair uses.
It’s just possible that this image, not helped by Mr O’Leary’s performance, is damaging the airline. After all, it is no longer the only game in town for those wanting low fares.
It’s not even the only game in town for charges for everything: but the problem for Ryanair is, I suspect, that there are some people who won’t fly with it if there is any available alternative –even if that alternative is, in reality, not much different.
Small wonder, then, that with all this going on, the airline cannily moved to address one of its customers biggest gripes by introducing allocated seating, despite Mr O’Leary suggesting otherwise when he took to Twitter to answer questions in a recent PR stunt.
Ryanair might look down. But detractors shouldn’t smile too quickly.