Background to the recapitalisation deal and recommendation to Customer Union members
When the The Co-operative Bank announced earlier this year that it was seeking either to find a buyer or a source of additional capital, we urged members of the Customer Union and supporters of the Save Our Bank campaign to stick together and wait until a deal was done before deciding what to do. We promised a vote of Customer Union members on whether to accept any deal.
We pointed out at the time that while the media headlines said the bank was 'up for sale', the bank had made it clear that it was also looking for other ways to raise the capital needed.
Now the bank has done a deal with its investors to inject a further £700m into the bank. This funding will allow the bank to retain its independence and meet its obligations to the regulator.
Following the deal, the bank has focused strongly on its ethical policy in marketing and communications and has told the Customer Union that it wants to extend the influence customers have over its future direction.
We welcome this.
However the Co-operative Group's stake in the bank was reduced to just 1% as a consequence of the deal (which included an agreement on separating the joint pension fund). Now the Group has sold even this remaining 1% shareholding. This means that the only remaining co-operative ownership of the bank is the tiny stake owned by the Customer Union.
This is a step backwards. We want to see more of the bank in co-operative ownership, not less.
However, we think it's still our bank and still worth saving.
As we have argued recently, we have seen the bank being treated as an asset that can be bought and sold. That's because it never was a real co-operative with members of its own. But that doesn't mean it can't eventually become one. The current investors will sell at some time. That will be an opportunity to bring new capital into the bank: from other co-operatives and mutuals and directly raised from customers and employees. This has always been our long term aim. You can see our thinking in the research paper we commissioned from Ethical Consumer on how to raise co-operative capital.
What's more, we have shown how organised customers can have a real influence on the bank. With more of us we can strengthen that influence, giving customers a say in how their bank works. Like a co-operative should be.
That's why we are recommending that we accept the deal, stick with the bank, and continue our work calling the bank to account on its ethics, growing the customer voice, and finding ways to grow a real co-operative ownership stake.
If you are a Customer Union member you should have received an email with a link to let you vote.
If you haven't received your email but think you should have done, please email email@example.com
Rob Harrison, Ryan Brightwell and Shaun Fensom, founders of the Save Our Bank campaign and the current board of the Customer Union, 31st October 2017.