The Co-operative Bank has agreed to formally recognise a customer “union” which aims to protect the bank’s ethical policies now it is owned by hedge funds.
The Customer Union for Ethical Banking said the agreement would give it influence with the Co-operative Bank’s leadership, and help the group rally support for its long-term goal of returning the lender to cooperative ownership.
The union – which has 1,200 members – grew out of the Save Our Bank campaign, which formed following the bank’s near collapse in 2013. That year, the bank revealed a £1.5bn hole in its accounts and had to be rescued by hedge funds.
It was eventually bought out completely, in 2017, after a group of US hedge funds – including Silver Point Capital, GoldenTree, Anchorage Capital, Blue Mountain and Cyrus Capital – backed a second rescue deal worth £700m. Those funds, as well as asset manager Invesco, now hold an 85% stake in the bank.
The lender also suffered a major blow after secret footage emerged of the bank’s chairman Paul Flowers – dubbed the “crystal Methodist” – that led to him pleading guilty to possession of cocaine, crystal meth and ketamine in 2014.
“Initially there was a lot of concern. We were alarmed that the hedge fund owners were coming in,” Ryan Brightwell, one of the union’s directors, said.
But Brightwell, a former Co-op Group employee, said the union had put pressure on the bank and ensured it stayed true to its ethical roots.
Earlier this year, the bank agreed to reinstate a special external audit of its values and ethics report after the union raised concerns. That audit – which took place every year since 1998 – is meant to independently assess whether the Coop Bank is actually implementing its policies.
“We do see a need for us to continue to watch closely,” Brightwell said.
The union is also hoping to bring the bank back under cooperative control. “Hedge funds typically don’t stick around for the longer term, so we imagine they will eventually look to sell on their interest in the bank. That will be the point to be particularly active in advocating for the bank to return to cooperative ownership,” Brightwell said.
Co-op Bank’s chief executive, Andrew Bester, said: “It’s fantastic that we have a group of loyal customers as committed to our ethical brand as we are – and our regular conversations with the customer union are positive and very valuable in terms of understanding what matters to them.”
