An automobile passes a Co-Operative Bank Plc branch, a unit of Co-Operative Group Ltd., at night in Manchester, U.K., on Sunday, Dec. 14, 2014. Co-Op Bank Chief Executive Officer Niall Booker earlier this month said it "would come as no surprise" if the bank didn't meet the Bank of England's minimum capital requirements when the results of the stress test are released on Dec. 16, which models how banks would fare in another financial crisis. Photographer: Paul Thomas/Bloomberg
© Bloomberg

If you work for Co-operative Bank, you must never joke you’re only there for the craic. The lender, which unveiled a £177m half-year loss on Thursday, remains deeply damaged by the crisis that engulfed it in 2013. First it emerged that Co-op Bank had a £1.5bn capital shortfall. Then, a tabloid sting caught ex-chairman Paul Flowers trying to buy cocaine and methamphetamine.

Snorts of derision turned to howls of laughter when the nickname “the Crystal Methodist” was coined to describe the clergyman, who in a parliamentary hearing had proved disturbingly ignorant about banking. Even before newspapers documented his apparent pursuit of Class A drugs, his selection as chairman had signalled the bank’s poor governance.

Three years on, Co-op Bank remains in recovery mode. Its group loss included a fair value writedown of £97.2m on an ill-advised merger with Britannia, a building society that had ventured into high-risk lending from an HQ on the Staffordshire moors. Co-op Bank had trumpeted the deal as creating a stronger mutually owned rival to shareholder-owned banks.

Instead, it precipitated the collapse in capital and a debt-for-equity swap that cut the stake of parent Co-operative Group to 20 per cent. The hedge funds which hold the balance have become long-term shareholders. They don’t have much choice — a stock market float is a distant prospect.

The privatisation of the state’s stake in Royal Bank of Scotland is equally far off. With both businesses whittling down toxic loan books, it is natural to see Co-Op Bank as RBS’s Mini-me. Both made a half-year operating profit on their “core businesses”. This was £2bn at RBS and £26m at Co-Op.

A weakening economy and lower interest rates mean neither bank is likely to recover fully on the watch of current management. Niall Booker, Co-op Bank’s chief executive, will step down next January. RBS’s phlegmatic Ross McEwan should be around for some time to come.

The parallels convey a dreary but important truth. The official character of an organisation — private company, mutually owned business or workers’ collective — might make far less difference to its success or failure than how well it is run. Politicians loudly championed customer and employee ownership until the Crystal Methodist made it harder to do so. This was the ultimate category error: the belief that easily observed structural differences matter more than the quality of management and governance, which are altogether more slippery.

Off the leash

Is the Competition and Markets Authority becoming more militant about takeovers involving securities trading platforms and associated businesses? This week the competition watchdog said it might force Intercontinental Exchange to sell Trayport, a utilities trading venue bought for $650m last year. It has also taken a hard line on the merger of ICAP and Tullet’s voice broking arm, with the result that ICAP has offered to distribute a 20 per cent stake in the combined business.

The CMA would doubtless riposte that independent panels review the impact takeovers might have on competition. However, the regulator appears to have been toughening its stance on M&A across all sectors. Andrea Coscelli, super smart former head of markets and mergers, is now acting chief executive of the whole organisation.

Sheldon Mills continues as mergers boss, so the flurry of activity cannot be ascribed to new broom syndrome, unless someone excited by such arcana as OTC rate swaps has been recruited at a lower level.

Perhaps the CMA is just perfecting its chops for a post-Brexit UK? Here it would get to rule on the largest deals, such as the combination of Deutsche Börse and the London Stock Exchange, instead of meekly turning them over to the European Commission. It’s an ill wind that blows nobody good.

Vicious cycle

The priorities of the UK seem a little skewed. The nation has more medal-winning cyclists than trade negotiators. The grand total for the latter is zero, according to Oliver Letwin. We had 14 Olympian pedallers at the last count. It’s all very well winning that race where cyclists try to keep up with a Deliveroo guy on a scooter. But we’re hurtling towards trade relations with Europe defined as “Albania Minus” rather than the “Switzerland Plus” arrangement sought by the City.

Out to grass

Former Barclays banker Roger Jenkins is said to be investing in a US marijuana business, Bloomberg reports. Mr Jenkins ran the structured capital markets arm of Barclays, where growing your own dope was also remunerative. One generally referred to him as “the client”, though.

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