Co-Op has lost the plot and now follows Animal Farm

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Co-Op has lost the plot and now follows the one for Animal Farm?

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A considerable proportion of investors do not want returns at any cost. This has resulted in a considerable growth in the number and range of ethical investment funds since the first (Stewardship) was offered in 1984 by Friends Provident.  The year has today provided an unhelpful Orwellian twist in the tale as I read with jaw-dropping bewilderment at the poor judgement that has been on public display in the once warm and cuddly “Co-Operative”. The news re-reported within my own trade press (FT Money Marketing) cites the story broken by the Observer which makes Animal Farm an even more vibrant metaphor for the suggestion that some are more equal than others.

The report that Euan Sutherland is set to pick up a financial package of £3.66m this year with a basic salary of £1.5m will surely make blood boil as savers and investors are left wondering how on earth a co-operative could possibly end up with such a disparate share of risk and reward. Nothing good can come from the report that suggests that more than £24million will be paid to 8 (eight) Co-Op executives over the next 2 years, despite the Bank almost collapsing  in spectacular style (with a £1.5bn black hole) and making thousands of redundancies.

The Co-operative online bank customers at Smile will presumably provide a quick migration to any other bank that at least isn’t attempting to claim being anything other than a Bank. Any informed customer will be rather outraged by what has been going on at the helm of what used to be an “ethical Bank”. It has been saved by private equity and the cultural shift or rather “modus operandi” has surely begun to reveal itself. To even have the nerve to have something called the “Ethical Plan” with the strap line “good things happen when we work together” one can only assume that they mean colluding with each other in the Board room rather than being “the most socially responsible business in the UK” you must be joking right?..

I found reading the Observer’s report “hugely disappointing” that yet again managers, not the owners are taking the lion share of the rewards, and so far being rewarded for failure with severance packages that could have only been dreamed up in the disconnected clubroom of arrogance and remuneration packages drawn up by “you scratch mine & I’ll scratch yours Ltd”. Yes I’m angry. Angry because Banking in Britain could be a lot better than this. Business is tarnished with understandable claims of greed and corruption. It doesn’t have to be this way, business should be leading not scoffing at the trough of self-interest.

If you are fed up with the Co-Operative, have a look at Triodos Bank, based in Bristol. This isn’t advice, merely a suggestion to have look and make up your own mind. To my mind, the grass is certainly greener… (the glass is anyhow).

Dominic Thomas: Solomons IFA

Co-Op has lost the plot and now follows Animal Farm2017-01-06T14:39:39+00:00

What’s Happened to the Co-Operative Bank?

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What’s Happened to the Co-Operative Bank?

You may well ask what has happened to the Co-Operative Bank? which has really come under fire of late. There is a very sad tale of Paul Flowers, the Chairman of the Bank since 2010. Mr Flowers has displayed some poor judgement, which he has admitted, but perhaps what is far more serious and telling of the problems within Banking and in particular the Co-Operative, is that it very difficult to see how he had the necessary skills and experience to run a large commercial Bank.

Experience from Inexperience?

Mr Flowers is a Methodist minister and for all I know he may be a wonderfully gifted one, however a 4 year job at NatWest when aged 19 (according to the BBC report) appears to be the sum total of his Banking experience. Now before everyone blows hot and cold on this, a Prime Minister has no experience of being one until they are elected, the same is true of pretty much any political position. There is certainly a case to be made for “you don’t get experience without starting without any” however it is more than surprising that in the months following the Credit Crunch he was appointed to such a significant position. I am not blaming Mr Flowers, but one has to question the wisdom of the Co-Operative Board and of course the regulatory approving body.

Biting off rather more than can be chewed

We all have off days and I’m sure have on occasion performed below expectations when “examined under the spot-light” and I can only hope that this explains his when questioned by the Treasury Select Committee on 6th November. This is shown on the BBC website and rather speaks for itself. Mr Flowers might be a thoroughly good man (my hope if he is a Methodist minister) however being a nice or decent bloke does not qualify you to run a multi-billion operation.

Blushes not SmilesSmile Bank logo

I am not suggesting that Mr Flowers is entirely responsible for the demise of the Co-op Bank, (which includes Smile and Britannia) but losses of £781m are hard to ignore. I wonder if you can read the figures held within the Group Interim Report 2013 any better. Turn to page 12 on see the Balance sheet. I can only assume that Mr Flowers was thinking of Consolidated Net Assets of £3.5bn rather than assets of the Bank.

Now, don’t get me wrong, I am a fan of co-operatives and any organisation that attempts to apply ethics to business practice as the Co-Operative have claimed over the years….Heaven knows we could all do with a competitive retail banking sector that has some decency! So the plight of Co-Op is all rather saddening. I hope that they can be “fixed” but now run by Hedge Fund Managers, not known for their ethics, but for their asset stripping results.  To my mind this appears to be the point at which the Co-Op Bank’s core values will either shine or fizzle out, consigned to history.

Dominic Thomas: Solomons IFA

What’s Happened to the Co-Operative Bank?2017-01-06T14:39:43+00:00
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