Co-op bank: Mutual - the magic word that doesn't mean so much

Do customers really fare better with a model like the Co-op bank?


I once worked for the NatWest bank – in the days when was it was still independent and in the private sector – and managed to see at close quarters the priorities and corporate strategies of the top management.

These gentlemen (there were very few women on the top floor of 41 Lothbury) spent much of their time running through the accounts of potential acquisitions, including some of the larger building societies such as the Halifax, Leeds, Alliance and Leicester, as well as the old Trustees Savings Banks (which were in fact owned by no one in particular).

Sometimes NatWest’s finest would idly muse over the prospects of getting a mega-merger with one of the other big banks, maybe Lloyds, past the regulators. Options to sell off various chunks of the business or expand into new and risky territories such as the US were also the subject of lively debate.

It is fair to say that in all these deliberations I cannot recall the Co-operative bank figuring. It was, in fact, a mighty irrelevance so far as the financial system was concerned, and the sort of place where lefty students would open accounts to get back at Barclays for operating in South Africa (though I also boycotted Barclays for the same reason).

The Co-op was regarded on the same level as the Post Office run Girobank: a curiosity. The ironic thing about the Co-op bank now is that its approaching share issue may actually transform an also-ran mutual into a banking group that at least has the scope to challenge the bigger players.

Then as now, the Co-op bank’s main selling point is it supposedly “ethical” stance. I am quite prepared to believe that it doesn’t extend credit to, say, pornographers or tobacco firms, and steers clear of environmental vandals. However, I never believed that the “mutual” model was of much direct benefit to customers, and the Co-op bank’s charges and approach to customers, like those of the buildings societies, were not markedly different from the supposedly wicked main high-street clearers, as we called them.

Mutuality was a demonstrable irrelevance so far as the building societies were concerned, and the voting and participation in “society” activities was always pitifully meagre, as it is today for survivors such as the Nationwide. The only time there was a mass turn-out on a vote was when the Halifax, Leeds, Cheltenham and Gloucester, Bristol and West and all the rest put to their members the proposal to sell out or float the outfit, with the promise of windfall shares or cash. Centuries-old traditions of mutuality were swiftly ditched.

In the case of the Co-op bank the link with members is still more tenuous. Unlike the old building societies and friendly societies and life offices, the customers (for that is what they are) of the Co-op bank do not formally own their bank – it is instead owned by the Co-op Group, which has a corporate structure of a complexity that would make an offshore hedge fund blush. In other words, the management of the Co-op bank was far less accountable than that of, say, HSBC to its stakeholders.

Last, mutuality is not and never has been a defence against idiotic management and business failure. If it were, we would not have endured the Equitable Life scandal, the collapse of the Derbyshire, Dunfermline, Cheshire and Britannia societies (the latter of course ending up in the Co-op bank). Nor indeed, the Co-op bank’s own disaster. The Co-op was actually poised to be the worst of the failures, as small investors, essentially no different to depositors and numbering many pensioners, were about to have a chunk of their savings taken from them – unprecedented in modern times. The arch-capitalist hedge funds actually saved them from such a fate. The Co-op Bank is lucky to survive in any form; it should make the most of what the stock market has to offer it.

The beautiful (numbers) game

Much excitement about the third quarter GDP growth figures, due out later this week. Since the financial crash they have had something of the quality of a much-loved sporting fixture, such as any of the matches on England’s perilous path to Brazil. Well, among media and City types at any rate. 

I’m happy to join in the pointless speculation. Looking at most of the “leading indicators”, such as business and consumer confidence, there seems little reason to doubt the recovery will continue and pick up pace. Much of this remains a “catch-up” from postponed spending during the long recession. The big picture remains one of sluggish performance born of uncompetitive fundamentals. A bit like the England football team, really.

React Now

  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Installation and Service / Security Engineer

£22000 - £40000 per annum: Recruitment Genius: This company is part of a Group...

Recruitment Genius: Service Charge Accounts Assistant

£16000 - £18000 per annum: Recruitment Genius: Are you a a young, dynamic pers...

Cancer Research UK: Corporate Partnerships Volunteer Events Coordinator – London

Voluntary: Cancer Research UK: We’re looking for someone to support our award ...

Ashdown Group: Head of IT - Hertfordshire - £90,000

£70000 - £90000 per annum + bonus + car allowance + benefits: Ashdown Group: H...

Day In a Page

Read Next

Errors & Omissions: Outgunned by a lack of military knowledge

Guy Keleny
Ukip leader Nigel Farage in Tiny Tim’s tea shop while canvassing in Rochester this week  

General Election 2015: What on earth happened to Ukip?

Matthew Norman
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions
Major medical journal Lancet under attack for 'extremist hate propaganda' over its coverage of the Israeli-Palestinian conflict

Lancet accused of 'anti-Israel hate propaganda' over coverage of Gaza conflict

Threat to free speech as publishers of renowned medical journal are accused of inciting hatred and violence
General Election 2015: Tories and Lib Dems throw their star names west to grab votes

All noisy on the Lib Dems' western front

The party has deployed its big guns in Cornwall to save its seats there. Simon Usborne heads to the heart of the battle
How Etsy became a crafty little earner: The online market has been floated for £1.2bn, but can craft and capitalism coexist?

How Etsy became a crafty little earner

The online market has been floated for £1.2bn, but can craft and capitalism coexist?
Guy Ritchie is the latest filmmaker to tackle King Arthur - one of our most versatile heroes

King Arthur is inspiring Guy Ritchie

Raluca Radulescu explains why his many permutations - from folk hero to chick-lit hunk - never cease to fascinate
Apple Watch: Will it live up to expectations for the man or woman on the street?

Apple Watch: Will it live up to expectations?

The Apple Watch has apparently sold millions even before its launch tomorrow
Don't fear the artichoke: it's a good cook's staple, with more choice than you'd think

Don't fear the artichoke

Artichokes are scary - they've got spikes and hairy bits, and British cooks tend to give them a wide berth. But they're an essential and delicious part of Italian cuisine
11 best men's socks

11 best men's socks

Make a statement with your accessories, starting from the bottom up
Paul Scholes column: Eden Hazard would be my Player of the Year – but I wonder if he has that appetite for goals of Messi or Ronaldo

Paul Scholes column

Hazard would be my Player of the Year – but I wonder if he has that appetite for goals of Messi or Ronaldo
Frank Warren: Tyson Fury will be closely watching Wladimir Klitschko... when he wins it'll be time to do a deal

Frank Warren's Ringside

Tyson Fury will be closely watching Wladimir Klitschko... when he wins it'll be time to do a deal
London Marathon 2015: Kenya's brothers in arms Wilson Kipsang and Dennis Kimetto ready to take on world

Kenya's brothers in arms take on world

Last year Wilson Kipsang had his marathon record taken off him by training partner and friend Dennis Kimetto. They talk about facing off in the London Marathon
Natalie Bennett interview: I've lost track of the last time I saw my Dad but it's not because I refuse to fly

Natalie Bennett interview: I've lost track of the last time I saw my Dad

Green leader prefers to stay clear of her 'painful' family memories but is more open about 'utterly unreasonable' personal attacks
Syria conflict: Khorasan return with a fresh influx of fighters awaiting the order to start 'shooting the birds'

Khorasan is back in Syria

America said these al-Qaeda militants were bombed out of the country last year - but Kim Sengupta hears a different story
General Election 2015: Is William Cash the man to woo Warwickshire North for Ukip?

On the campaign trail with Ukip

Is William Cash the man to woo Warwickshire North?
Four rival Robin Hood movies get Hollywood go-head - and Friar Tuck will become a superhero

Expect a rush on men's tights

Studios line up four Robin Hoods productions