‘Care, respect, clarity and reassurance’ are what the Co-operative funeral service says it offers the bereaved, and the parent Co-op Group may soon find itself in need of just such support to help it come to terms with the resolution of the Co-op Bank. ‘Resolution’ is modern banking jargon for an orderly burial, involving powers vested in the Bank of England to transfer all or part of a troubled bank’s business to a private-sector purchaser, or (if the Treasury is so inclined) into temporary public ownership, or to force an accelerated insolvency procedure that ensures depositors are either paid out by the Financial Services Compensation Scheme or have transferred to healthier banks.
These last rites have not yet been publicly contemplated, but it is hard to see how else the story can end. Knocked off course by its disastrous takeover of the Britannia building society, fatally distracted by its pursuit (with Vince Cable’s pushing) of Project Verde, the purchase of Lloyds branches that never happened, the bank has a huge black hole in its balance sheet and scant hope of returning to profit. Its ‘ethical’ status has been dented by its record of mis-selling payment protection insurance. Following a recapitalisation last year, it is 70 per cent owned by a curious collection of US hedge funds whose only interest is to make a fat turn as swiftly as possible, while the Co-op Group itself, as a 30 per cent shareholder, is left with diminished influence over the bank which so dangerously bears its name.
And that stake will reduce again if the parent (which has other problems of its own, notably in the aftermath of its acquisition of Somerfield supermarkets) cannot come up with its share of an additional £400 million capital call made by the bank last month. The distinctly non-ethical consortium of banks to which the Co-op Group is heavily indebted — Barclays, RBS and Lloyds to the fore — are no doubt ready to swallow Co-op Bank’s 4.7 million retail customers between them as part of a wider settlement.
All this will come into even sharper focus with the confirmation of record group losses this week. Meanwhile in the board game of corporate survival, ‘Lord Myners parachuted in to overhaul your governance’ was probably more of a snake than a ladder in the first place; but ‘Myners’ shock resignation’ is a big, slippery, hissing PR disaster, confirming as it does what departing chief executive Euan Sutherland said last month about the group being ‘ungovernable’.
Myners — the multi-millionaire former Labour minister for the City, known according to a Spectator profile for his ‘iconoclastic views, considerable ego and ferocious temper’ as well as his ‘rich, fruity voice’ and ‘glossy’ metropolitan social profile — was never likely to hit it off with the representatives of provincial Co-operative movements who make up the group’s bloated and unbusinesslike board. Those directors are now locked in a defensive mindset which makes intervention by the Bank of England and the Treasury all the more likely in the end. The walk-on part of Lord Myners is, I fear, no more than a sideshow in the slow procession towards the crematorium of this once great institution.