The Co-operative Bank has been in the media spotlight, following the announcement of a downgrade in ratings by the agency Moody’s.
None of this has been good news. But it has been encouraging for me to see the way that the new leadership team at the Co-operative Group has responded to this, with a clear and credible set of steps to move forward.
Andrew Bibby debates some of the context for the Co-operative Bank in an article for the Guardian. He is right to point out that raising new capital for co-operatives isn’t the same as for shareholder companies as it has to be achieved in ways that live up to our underlying co-operative principles.
At Co-operatives UK, we organised a members roundtable on co-operative capital last month, looking at innovations in finance for co-operatives. We will publish a report on this over the next period.
We have also helped to set up access to potential lending facilities with our member Unity Trust Bank to support co-operatives and mutuals to meet their business needs. The Co-operative Bank can still be a first point of call for its existing customer organisations. But Unity Trust Bank is also part of the wider co-operative sector, focuses on social business lending and has a very good understanding of the unique needs of co-operatives and mutuals. It was also the first bank in the UK to be registered as a living wage employer.
Unity also works closely with community development loan funds to promote a range of packaged lending to support business growth. Grouped into the Community Development Finance Association, for which I am very proud to be the current Honorary President, these are developing an ambitious agenda for a more effective and inclusive market for enterprise lending.
The good news underlying all of this is that there is still a far lower rate of business failure in the co-operative and mutual sector.
Nationwide Building Society has the confidence of being a mutual, owned by customers and has a spring in its step. They have benefited, as the Co-operative Bank, continues to, from high customer loyalty – and they are attracting something like 1,000 current account customers a day from the shareholder banks.
Meanwhile, the Move Your Money campaign, which is playing such an important role in filling the deficit in debate on the fundamentals of banking, is gearing up for its big ‘switch and tell’ campaign.
Worldwide, co-operative banks have clearly outperformed both shareholder banks and state-backed banks, as a comprehensive new academic book from Professor Johnston Birchall of Stirling University sets out.
The big banks that have been bailed out, including Royal Bank of Scotland, Lloyds TSB, meanwhile probably want what the co-operative sector has got. Barclays has paid extraordinary sums to be told how to be ethical.
These are tough times, but we all need a better banking system to emerge at the end.