Even dear old ethical businesses screw up sometimes – as Co-op has done

It’s all very well lauding the Co-op and John Lewis, but these are businesses run by people and the latter have an unfortunate habit of making mistakes


It is hard to avoid the shock when you hear a radio news bulletin announce that the Co-op lost £559m in the first half of the year, and that the Co-op Bank alone suffered losses of £709m. The Co-op! The dear old group where everyone can be a member, the one with a friendly, less aggressive face that prides itself on being ethical and right on. The retail and banking combine that is held up by politicians, along with another mutual, John Lewis, as a house of virtue, to be copied by others.

I must admit, I’ve been considering for a while whether to switch my bank account to the Co-op. I’m lucky, in that where I live there is one of the bank’s few high-street branches (it’s got nothing like the network of the major players). Every time I’ve walked past it, and read the proclamations in the windows about the Co-op being the good bank, I’ve been tempted. But then, lazy so-and-so that I am, I can’t be bothered with all the form-filling and I stick with my existing, non-ethical, uncaring, global behemoth of a financial institution that could swallow the Co-op Bank without blinking.

My lot do business in all sorts of areas where the Co-op (slogan “Good for Everyone”) would not deign to go, such as oil, defence and tobacco. In fact, the Co-op does invest in some of those sectors, via its investment funds.

Still, there’s no question that it is more ethical than most. And, sadly, now in more trouble than many banks.

Because, while it’s all very well lauding the Co-op and John Lewis, it’s too easily forgotten that, despite their egalitarianism, they’re businesses run by people and the latter can have an unfortunate habit of making mistakes and falling prone to human frailty.

In short, their bosses are perfectly capable of screwing up, the same as those elsewhere, and when they do, the much-admired mutual formula, suddenly, is found wanting.

The Co-op Bank’s problems are not new. They began in 2009, when the bank bought Britannia Building Society. What seemed like a solid fit, turned into a nightmare, with the Co-op inheriting a terrible commercial property loan book. The new owner was too slow to appreciate just how bad some of the loans were, and losses mounted.

In the results announced yesterday, the bank wrote off £496m of the loans. The difficulties did not stop there. Following the banking crisis, the regulator, the Prudential Regulation Authority, has got tough with the banks, requiring them to hold more capital in the event of future shortfalls. In the case of the Co-op, the bank was told it had to put an extra £1.5bn to one side.

These issues were exposed, starkly, when the Co-op tried to buy 630 branches from Lloyds, a bank that had been forced to turn to the Government for assistance. In 2012, the £750m purchase was agreed. Then, earlier this year, it was off. The reasons cited were the more demanding conditions imposed by the regulator, and the weak economic outlook. That was followed by a downgrade of the Co-op Bank’s debt from Moody’s, the rating agency, to “junk” status.

Late in the day, a rescue is under way. A new management team has announced measures designed to come up with the £1.5bn, including raising cash from bondholders and selling its insurance division.

It has all taken a long time – during which the bank has had to cope with corporate and retail customers withdrawing their deposits. The new chief of the Co-op Group, Euan Sutherland, pictured, is putting on a brave face, pointing to the recovery plan but warning there are “no quick fixes”.

This, arguably, is where the Co-op’s hallowed ownership structure, has come unstuck. Unlike other businesses of a similar size, the Co-op does not have mighty, financially sophisticated institutional shareholders. It has 2.5 million members, real people, who count on receiving the group’s regular payout or “divi”.

Sutherland and his senior colleagues are conscious of the duty they owe to those little folk. In truth, they could have found the £1.5bn, by holding a car boot sale of some of the Co-op’s myriad interests – by off-loading, for example, the pharmacy, funeral director and travel businesses.

But those disposals would have been made at a discount and the overall group would have been weakened. Any other equivalent business and they would have called in the institutional shareholders for a cosy chat, and talked them through what was intended. Not the Co-op.

Likewise, they were afraid to go, cap in hand, to the Government for fear of undermining the Co-op brand and ethos. Again, their sense of obligation to the millions of members and the fiercely proud Co-op movement meant their room for manoeuvre was heavily restricted. It’s a salutary tale, one that those who hold up the Co-op and John Lewis as iconic models to be followed would do well to heed. Nothing it seems is perfect, unfortunately not even them.

Bourne trumps Bond every time

So there we were, me and Richard, sitting in the TV room of a house we’d rented in rural Suffolk for a few days.

It was late in the evening. The children were in bed, asleep; our wives were in the kitchen, chatting about schools, while working their way through the wine. The men had graduated by some subliminal, unspoken male mechanism to the other room.

We flicked the TV remote. There wasn’t much on. On the main stations, it was the usual Saturday night fare. Elsewhere, there were re-runs of Father Ted, old Top Gear, plenty of property and cooking, and footage of police arresting people.

But, praise be, there was Bourne. As soon as we spotted it, without prompting, we both gushed at once: we love Bourne, adore the movies, and can identify every car chase, each fight scene. It was like we were sharing a guilty secret. It’s funny, I said, because I’d had exactly the same experience with another male pal recently. He was also in the City – Richard works for one of the big law firms – a top PR. Like me and Richard, he’d seen all the Bourne films over and over. Yet, each occasion, if a Bourne was on, he’d be drawn to it.

On Monday this week, Manchester United were playing Chelsea on Sky Sports, but on ITV 1, Matt Damon was doing his stuff in The Bourne Identity. Damon won, even though it was a film I knew backwards.

Why do so many of us watch Bourne? There’s the sheer escapism of immersing oneself in two hours of improbable stunts. But the action is also breath-taking in James Bond, and yet, 007 does not have anything like the same appeal. There’s no sex in Bourne. Somehow that does not seem to matter. If anything it’s part of the attraction – Bourne does not let it get in the way of the real business of discovering his past.

Damon plays the character without over-the-top emotion, raised eyebrows or clever one-liners. He’s not a super-suave Bond, blessed with smooth good looks. He does not wear a tuxedo or drive an Aston Martin. He does not require a medium dry vodka martini. Neither does he rely on brilliant, ingenious gadgetry supplied by eccentric boffins to get him through.

He’s on his own, him against the Establishment, with only his own skill as a physical fighter and mental cunning as his weapons.

Bourne’s foes lack personality. They’re not master villains, stroking cats as they try to conquer the world, cracking jokes as they dispatch someone to a horrible end. They’re corrupt officials, anxious to save their own skins. Again, we find them totally believable. They’re misogynists, too, which only helps to confirm their authenticity.

Bourne has no back-up, no caring bosses to call upon; there are no supportive colleagues ready to provide assistance. His is a lonely, seemingly never-ending, struggle. Maybe this is what we see, when we sit, in the darkness and stillness of our homes, late in the evening, contemplating our families, finances and careers.

We see ourselves: out there battling against the enemy, single-handedly taking on all-comers, the unseen, out to do us harm, and racing constantly just to stay one step ahead.

Bourne is Everyman, albeit one with astonishing physical prowess, courage and guile. That’s why ordinary blokes like him so much: he’s our hero.

My favourite scene? When he’s inside a house, hears cars pull up, knows the occupants are out to kill him, but calmly turns on the gas, rolls up a newspaper and rams it into the toaster. He presses down the toaster lever and exits via the back door. Seconds later, the paper catches alight and causes an explosion that blows the building and would-be assailants to bits. Genius. It gets me every time.

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