If the bank abandons its ethical principles then millions of customers will abandon the bank ...
For decades the Co-operative Bank has been a safe home for the money of customers attracted by its commitments to supporting human rights, animal welfare, fair trade and the environment. These promises mean, for example, that the Co-op bank does not lend money to companies that carry out animal experimentation or sell arms, tobacco or fossil fuels.
In August 2009 the Bank rescued the troubled Britannia Building Society, whose loan portfolio included enormous dud loans to property developers - just months after the Society's finances had been reviewed by the Bank of England. But it turned out that Britannia was in much worse trouble than either the Co-op or the Bank of England had realised.
The losses on Britannia and enhanced capital requirements on retail banks have left the Co-op Bank with a £1.5 billion 'black hole' to fill. Opportunistic hedge funds have now bought up hundreds of millions of pounds worth of the Bank's bonds, which they are insisting on converting to shares in a so-called 'bail-in', rather than investing additional capital.
This forced takeover will leave the Bank's present owner, the Cooperative Group, with only 30% of the shares. Chief among the new owners will be two US-based hedge funds, Aurelius and Silver Point. Existing customers fear that under new management, the Coop Bank will abandon all its ethical policies.
But now a group of Co-op Bank customers, backed by Ethical Consumer magazine, have launched the Save Our Bank campaign to ensure the Bank adheres to its long-established values. "We are campaigning for two things", states its website. "To enshrine the bank’s ethical policy into its articles of association and to return the bank to mutual ownership as soon as possible. By sticking together we are making it clear to those seizing control of the bank that if they agree, we will move elsewhere, en masse."
Ethical Consumer editor Rob Harrison said of the takeover: "The bank’s new owners need to understand that if the bank abandons its ethical principles then millions of customers will abandon the bank. If this happens the Co-op is dead in the water and their investment will be worthless."
The Bank has said it will write its ethical principles into its articles of association. But the details of this commitment have yet to be resolved. "We now need to put pressure on all those involved to ensure this happens", says Harrison. "That’s why we are asking all Co-op bank customers to stay with the Co-op Bank, and sign up to our campaign."
"The battle for who will have real control is still on. In that battle we, the customers can have a real influence – but only if we act together."