Co-op is Crap
If this report from the BBC is anything to go by, I think I made the right decision in shutting my account with the Co-op Bank.
The Co-op seems to take a keen interest in politics with its donations to the Labour Party and its intervention in the Scottish independence referendum which had nothing to do with the Co-op's core business, if you ask me.
So I voted with my feet and took my business elsewhere while the stress levels within the Bank must be reaching record levels.
Co-op Bank fails Bank of England stress tests
By Joe Miller - BBC News
The Co-operative Bank has failed a "stress test" by the Bank of England that assessed major UK lenders' ability to withstand another financial crisis.
A further two banks - Lloyds Banking Group and Royal Bank of Scotland - were found to be at risk in the event of a "severe economic downturn".
The Bank of England tested the lenders' resilience to a 35% fall in house prices, and a 30% drop in the value of the pound, among other factors.
Five major banks passed the test.
The results show that the banking system is "significantly more resilient", said Bank of England governor Mark Carney, and that the "growing confidence in the system is merited".
"This was a demanding test," he added.
Stress test scenario
- Sterling falls by about 30%
- House prices fall by 35%
- Bank rate rises to 4.2%
- CPI inflation peaks at 6.6%
- Unemployment rises to nearly 12%
- GDP falls by 3.5%
- Share prices fall by 30%
HSBC, Barclays, Santander, Standard Chartered and Nationwide all passed.
The doomsday scenario mapped out by the Bank of England included an unemployment rate of nearly 12%, inflation rising to more than 6%, and interest rates rising to 4.2%.
The Bank emphasised that the scenario was "extreme", and was not likely to materialise.
'No surprise'
The Co-operative Bank, which had to be rescued last year after a £1.5bn black hole was found in its balance sheet, was the only bank deemed to require a "revised capital plan".
The chief executive of Co-operative Bank, Niall Booker, said it was "no surprise" that the lender had not passed the test, but said the Bank was on track to "significantly reduce risk-weighted assets".
The Royal Bank of Scotland and Lloyds Banking Group - both of which were bailed out by the taxpayer during the financial crisis, were found to be in need of further strengthening.
But the Bank of England stopped short of requiring them to submit new plans, as both lenders are already taking action to reduce risks.
The Bank of England's stress tests built on similar health checks by the European Banking Authority (EBA) in October.
The EBA found that 24 European banks needed to shore up their finances.
Four UK banks were subjected to the EBA test: Royal Bank of Scotland, HSBC, Lloyds Banking Group and Barclays. They all passed.
Analysis: Kamal Ahmed, BBC business editor
The Bank of England has made it clear that its doomsday scenario is not something that it thinks is likely to happen at the moment.
It is an attempt to replicate the bad news piled upon bad news such as occurred in 2008.
And given that the present risks in the economy include a collapse in the oil price and possible deflation in the eurozone, some argue that the Bank is testing the wrong thing.
Co-op is Crap (29 August 2014)
I noticed that the chief executive of the Co-operative Bank, Niall Booker, was one of the signatories to a letter from business 'leaders' urging a No vote in the Scottish independence referendum.
Now I don't know Niall Booker personally, but I had occasion to write to him recently and as I wasn't in the least convinced by his answer I am no longer a customer of the bank.
Here are a few posts from the blog site archive which explain why I think the Co-op is crap.
Co-op Bank (10 December 2013)
I said the other day that I would write a letter of complaint to the Co-op Bank over its financial support for the Labour Party - so here's a copy of the letter I sent by email to the Co-op Bank's chief executive, Niall Booker, the other day.
To my mind, banks should stay out of party politics - all banks not just the Co-op.
If individuals want to give their own money to the Labour Party or some other party, then that's up to them - and that's how it should be with the trade unions as well, if you ask me.
Niall Booker
Chief Executive
Co-op Bank
Dear Niall
The Co-op and Party Politics
I'm glad my mind is finally made up.
I am going to close my account and take my business elsewhere because the Co-op is crap and can't face up to reality, if this report from the BBC is to be believed - and I have to say it makes perfect sense to me.
The dozen or so independent societies which combine to form the Co-op across the UK seem completely out of their depth to me, otherwise the business would not be in the mess it finds itself in today.
And while I'm no admirer of the House of Lords at least Lord Myners took on the challenge of trying to reorganise and bring some sense to the Co-op's operations for a salary of £1, so he appears to be driven by the right motives.
But still the 'independent' societies within the Co-op seem intent on re-arranging the deck chairs, as the SS Co-op bears down on the iceberg ahead.
So, I'm off as they say although I wish all the very best to those who stay on board because I think they'll need a lot of luck in the days ahead.
Why Co-op's woes are deepening
By Kamal Ahmed
BBC
Sent on 7 March, the covering letter from the Midcounties Co-operative, was suitably polite. "If you would like further information on the points raised, please let me know."
The letter was to Lord Myners, the former city minister charged with coming up with a plan to overhaul Co-op Group. With the letter was Midcounties' submission to Lord Myners' review.
In forensic detail the submission picks apart the main arguments contained in the initial plans for change. It is also provides stark evidence that here is an organisation that agrees it needs to reform - it just doesn't agree how.
"In recent years Midcounties has observed a failure at the most senior levels in the Group . . . to consistently reflect co-operative values and principles and the best standards of good governance and transparency," says the submission, which I have seen.
"This was not just a matter of errors of judgement over particular business decisions but also, more crucially, of a fundamentally flawed vision of the future of the movement which led to risk taking of a kind which was inappropriate and unnecessary in the context of co-operative ownership."
Midcounties is an important player in this game, the largest of the Co-op's independent societies with revenues of £1.2bn and more than 10,000 employees. The dozen independent societies across the UK have more than 20% of the voting rights on the group board and five are represented at group level. What they say matters for the future of the Co-op.
The background, as we know, is grim. As my colleague Robert Peston revealed last February Co-op Group is likely to report losses of up to £2bn when it reveals its 2013 figures next week.
The supermarkets, pharmacies and funerals business needs to change its model to survive. Many criticise a byzantine governance structure which critics say rewards longevity, skill at internal politics and willingness to attend endless committee meetings, above managerial skills.
Over the last decade, Co-op expanded rapidly, buying Somerfield supermarkets and the Britannia building society. Its structure simply couldn't cope.
Lord Myners - a non-executive board member of Co-op Group - is now on a listening tour, refining his initial proposals which focus on bringing in outside directors and giving the Co-op some of the checks and balances more akin to a publicly listed company. As The Guardian reports this morning, Midcounties has already voted against the reforms, with its president, Patrick Gray, saying that they will not support the "menu" that Lord Myners is offering.
I'm hearing rumblings that the Treasury Select Committee is very keen to call Euan Sutherland to give evidence to its inquiry into the Co-op bank collapse and its impact on the Group's problems.
In what would be an incendiary hearing, MPs are particularly keen to ask the former chief executive exactly what he meant when he said that the business was "ungovernable" and why he left so abruptly. Mr Sutherland also questioned the viability of the 170-year-old organisation.
If it happens - and I believe it will - it will be standing room only.
I am a customer (saver) with the Co-op Bank to which my account was transferred from the now defunct Britannia Building Society.
I am sure you have your hands full at the moment with the fall-out from this terrible Reverend Flowers business, but I would like to let you know how much I resent and disapprove of the Co-op Bank getting so heavily involved in party politics.
To my mind, it is completely wrong for the Co-op Bank to be giving 'soft loans' or financial donations to the Labour Party such as the £50,000 handed over recently to the office of Ed Balls MP, Labour's shadow chancellor. The money involved belongs to the Co-op's customers and, in my view, it is quite outrageous for the company's funds to be used in this way.
I imagine the appointment of the Reverend Paul Flowers as Chairman of the Co-op Bank had something to do with his party political connections to the Labour Party and clearly this gentleman's out-of-control, hypocritical behaviour is doing considerable damage to the Co-op's public image.
So, I hope you will see the importance of putting your customers first and putting an end to these party political shenanigans, otherwise I will be taking my business elsewhere.
I look forward to your reply.
Kind regards
Mark Irvine
Co-op is Crap
I'm glad my mind is finally made up.
I am going to close my account and take my business elsewhere because the Co-op is crap and can't face up to reality, if this report from the BBC is to be believed - and I have to say it makes perfect sense to me.
The dozen or so independent societies which combine to form the Co-op across the UK seem completely out of their depth to me, otherwise the business would not be in the mess it finds itself in today.
And while I'm no admirer of the House of Lords at least Lord Myners took on the challenge of trying to reorganise and bring some sense to the Co-op's operations for a salary of £1, so he appears to be driven by the right motives.
But still the 'independent' societies within the Co-op seem intent on re-arranging the deck chairs, as the SS Co-op bears down on the iceberg ahead.
So, I'm off as they say although I wish all the very best to those who stay on board because I think they'll need a lot of luck in the days ahead.
Why Co-op's woes are deepening
By Kamal Ahmed
BBC
Sent on 7 March, the covering letter from the Midcounties Co-operative, was suitably polite. "If you would like further information on the points raised, please let me know."
The letter was to Lord Myners, the former city minister charged with coming up with a plan to overhaul Co-op Group. With the letter was Midcounties' submission to Lord Myners' review.
In forensic detail the submission picks apart the main arguments contained in the initial plans for change. It is also provides stark evidence that here is an organisation that agrees it needs to reform - it just doesn't agree how.
"In recent years Midcounties has observed a failure at the most senior levels in the Group . . . to consistently reflect co-operative values and principles and the best standards of good governance and transparency," says the submission, which I have seen.
"This was not just a matter of errors of judgement over particular business decisions but also, more crucially, of a fundamentally flawed vision of the future of the movement which led to risk taking of a kind which was inappropriate and unnecessary in the context of co-operative ownership."
Midcounties is an important player in this game, the largest of the Co-op's independent societies with revenues of £1.2bn and more than 10,000 employees. The dozen independent societies across the UK have more than 20% of the voting rights on the group board and five are represented at group level. What they say matters for the future of the Co-op.
The background, as we know, is grim. As my colleague Robert Peston revealed last February Co-op Group is likely to report losses of up to £2bn when it reveals its 2013 figures next week.
The supermarkets, pharmacies and funerals business needs to change its model to survive. Many criticise a byzantine governance structure which critics say rewards longevity, skill at internal politics and willingness to attend endless committee meetings, above managerial skills.
Over the last decade, Co-op expanded rapidly, buying Somerfield supermarkets and the Britannia building society. Its structure simply couldn't cope.
Lord Myners - a non-executive board member of Co-op Group - is now on a listening tour, refining his initial proposals which focus on bringing in outside directors and giving the Co-op some of the checks and balances more akin to a publicly listed company. As The Guardian reports this morning, Midcounties has already voted against the reforms, with its president, Patrick Gray, saying that they will not support the "menu" that Lord Myners is offering.
Lord Myners has several proposals for the future of Co-op Group
Mr Gray, whom I spoke to yesterday and who made an appearance on the Today programme and BBC Radio 5 live this morning, is most concerned that by changing the governance structure, the very democratic and "values-led" DNA of the present Co-op might be lost. Euan Sutherland, the former Co-op chief executive who resigned after details of his pay were leaked to The Observer, argued that democracy and values might be vital, but without radical change the whole future of the business was at risk.
This is a disagreement that goes to the heart of the Co-op debate. As its submission continues, "Midcounties does not share the view that in a co-operative context member control is incompatible with the needs of a complex commercial enterprise. Indeed, experience in the UK and abroad demonstrates that this is clearly not the case.
"Among the independent consumer co-operative societies, it is demonstrably the case that it is the most democratic that are the most successful in commercial terms, not the reverse."
The clash is one of cultures. Lord Myners is steeped in PLC history, having formerly been chairman of both the property business, Land Securities, and Marks and Spencer. Mr Sutherland was formerly at the retail giant, Kingfisher. Niall Booker, the chief executive of Co-op Bank in which the Co-op Group retains a 30% stake, is a veteran of HSBC.
They are coming up against committed independent heads of co-operative societies who have long experience of mutual operations. They are suspicious of where change is leading.
"A fundamental point is that the relationship [between Group and its Co-op members] is not purely commercial," the Midcounties submission says. "All societies are part of the co-operative movement.
"We share a common interest in showing that co-operation is a force for good in society and an important organisational model in itself."
Lord Myners has until a special general meeting of the Co-op Group in the summer to get his proposals agreed. He will have a tough job.
UPDATE 13:15
Mr Gray, whom I spoke to yesterday and who made an appearance on the Today programme and BBC Radio 5 live this morning, is most concerned that by changing the governance structure, the very democratic and "values-led" DNA of the present Co-op might be lost. Euan Sutherland, the former Co-op chief executive who resigned after details of his pay were leaked to The Observer, argued that democracy and values might be vital, but without radical change the whole future of the business was at risk.
This is a disagreement that goes to the heart of the Co-op debate. As its submission continues, "Midcounties does not share the view that in a co-operative context member control is incompatible with the needs of a complex commercial enterprise. Indeed, experience in the UK and abroad demonstrates that this is clearly not the case.
"Among the independent consumer co-operative societies, it is demonstrably the case that it is the most democratic that are the most successful in commercial terms, not the reverse."
The clash is one of cultures. Lord Myners is steeped in PLC history, having formerly been chairman of both the property business, Land Securities, and Marks and Spencer. Mr Sutherland was formerly at the retail giant, Kingfisher. Niall Booker, the chief executive of Co-op Bank in which the Co-op Group retains a 30% stake, is a veteran of HSBC.
They are coming up against committed independent heads of co-operative societies who have long experience of mutual operations. They are suspicious of where change is leading.
"A fundamental point is that the relationship [between Group and its Co-op members] is not purely commercial," the Midcounties submission says. "All societies are part of the co-operative movement.
"We share a common interest in showing that co-operation is a force for good in society and an important organisational model in itself."
Lord Myners has until a special general meeting of the Co-op Group in the summer to get his proposals agreed. He will have a tough job.
UPDATE 13:15
I'm hearing rumblings that the Treasury Select Committee is very keen to call Euan Sutherland to give evidence to its inquiry into the Co-op bank collapse and its impact on the Group's problems.
In what would be an incendiary hearing, MPs are particularly keen to ask the former chief executive exactly what he meant when he said that the business was "ungovernable" and why he left so abruptly. Mr Sutherland also questioned the viability of the 170-year-old organisation.
If it happens - and I believe it will - it will be standing room only.
