Continuity comes at quite a cost of you’re the Co-op Bank. More than £4m could be handed to keep chief executive Niall Booker in the hot seat this year and he’s said he will remain in post until the end of 2016.
In addition to that news, the institution this morning revealed the fruits of his work to date.
It continues to be heavily loss making, although the headline number is quite a bit less than last year. A big reduction in PPI mis-selling compensation was major reason for that, although operational performance has improved.
But the company is still going to have to try and hasten plans to sell off assets so it can meet a target of being in shape to deal with an economic nasty by 2019.
It is against that backdrop that the package that a bank claiming to adhere to Co-operative values has handed to its chief executive needs to be considered.
This is a small and troubled bank, and yet it is paying its boss more than the man currently turning around a much bigger and more complex institution. I’m talking about the FTSE 100 giant Royal Bank of Scotland, which yesterday continued its own transformation by ditching the overseas business of private bank Coutts (unfortunately while RBS keeps the name, I understand that it also keeps any penalties from tax shenanigans at the Swiss bit.).
It’s true that RBS’s turnaround is further down the road than Co-op’s. Regulators are more or less happy with its capital position. But it’s chief executive, Ross McEwan, still has quite a bit of work to do. Keeping him at it is costing RBS’s biggest shareholder - the tax payer - quite a bit less than it’s going to cost the Co-operative Bank to keep its top man. Not least because Mr McEwan gave up £1m with of “role based allowance” last year.
That sort of gesture might go some way towards restoring RBS’s battered reputation. In a very real sense Mr Booker and his bank’s board run the risk of damaging the Co-operative Bank’s.
These sort of packages are about as far removed from the Co-operative principles as it is possible to get.
We are told that the rate at which its customers are departing is slowing. The bank might care to remember that “continuity” will only be served if it keeps them on board. They are far more important to the future of this business than Mr Booker is.
Unfortunately, his unconscionable package might just serve a reminder to those who remain that their institution is now controlled not by a Co-operative but by hedge funds. Where these sort of payments are par for the course.