The bank needs another £400m capital
Last week the Co-op Bank announced that unforeseen losses will mean it needs to raise another £400 million in capital on top of the £1.5 billion it raised in the recapitalisation last year.
Raising £1.5 billion meant handing 70% of the bank to private owners, leaving just 30% with former owners The Co-operative Group. There is a danger that if private shareholders pump extra cash in now, the Group won’t have cash to match, and its shareholding will be “diluted” below 30%.
Alongside this danger, we at Save Our Bank also see an opportunity here. We’ve been working on plans to create a way for ordinary customers and co-op members to invest in a new co-operative shareholding in the bank, through which we can make the case for ethics and re-mutualisation. We’ll be providing details of these plans soon.
Meanwhile, we are calling on the bank to make sure that ordinary customers are given a chance to buy some of the new shares when they are issued. You can help make this point to the bank - see the end of this email.
So, it’s spring, when’s the ethics consultation?
The Co-op Bank announced late last year that it would consult with its customers on ethics “in spring”. We took a look outside and there is blossom on the trees, so we’re eager to see some sign of this soon!
We want to make sure the bank gets the message loud and clear that there should be no watering down of the Ethical Policy that was one of the main reasons for many of us using the bank. We will be watching this consultation very carefully.
Also, in light of the bonus scandal at The Co-op Group we have (as announced in our last newsletter) teamed up with Unite, Britain’s largest trade union, to call on the bank to firmly distance itself from the scandal at the Group by including questions on executive pay and bonuses in the upcoming consultation.
We’ve had a brilliant response from Save Our Bank supporters – you have been writing and tweeting the bank in your hundreds to get the message across to the bank. While the consultation has not yet begun, it’s not too late to join in. Let’s keep the pressure on. See our page on how to contact the bank here.
Upheaval at the Co-operative Group
Save Our Bank was set up when the Co-operative Group - which runs most of the food shops, funerals and other businesses - lost its controlling stake in the Co-operative Bank. The two organisations are now separately managed but the bank disaster, including the furore about the appointment of former bank chair Paul Flowers, led the Group to appoint Labour peer Lord Myners to carry out a root-and-branch review of the way it is governed. This has caused nervousness among active members worried about whether it will weaken democracy. Lord Myners says emphatically not. Some - like the activists behind website springboard.coop – have welcomed the review. The debate will come to a head soon as the Group, like the bank, announces massive losses for 2013, and starts the selloff of its farms and pharmacy chain to plug the hole and reduce debt.
Some supporters have suggested that we now need a “Save Our Co-op” campaign. While of course we wouldn’t stand in the way of anyone who wanted to set one up, we at Save Our Bank want to keep the focus on preserving the bank’s ethics and returning it to majority co-operative ownership. That won’t be possible unless the Co-operative Group can play its part as a healthy democratic co-operative and we urge supporters who are members of the Co-operative Group to join in the debate at springboard.coop.
Help us keep up the pressure on
If you're a social media user then please contact the bank:
Tweet now to lobby the bank:
Dear @CoopBankPR - You need £400 million. Why not ask your customers to invest? That is what co-operatives do. #SaveOurBank
Contact your Facebook friends and ask them to sign up to the campaign:
If you’re a Co-op Bank customer and want the bank to keep its ethics and return to co-operative ownership, sign up to the Save Our Bank campaign. We’re stronger together! http://saveourbank.coop/join
With best wishes,
The Save Our Bank campaign team