13th June 2014
Customers of disgraced bank The Co-operative will have a chance to shape the future of the organisation as it rewrites its ethical policies following a near collapse.
The Co-operative Bank has launched a survey of customers and staff to understand their views on values and ethics, something the organisation had prided itself on in the past but which has been accused of lacking following series of financial and other scandals.
It will ask customers about five areas of its current ‘ethical framework’, which include human rights, international development, animal welfare, economic and social development in Britain, and the environment. It will also ask questions on three new areas: responsible banking, transparency and treating customer fairly.
The ethical policy, which was launched in 1992, determines who Co-op can and cannot lend to and since it was launched the bank has turned down £1.2 billion of lending which does not fit with its policy.
Last November the values and ethics were written into the bank’s constitution for the first time in its 140 year history to try and placate customers after seven hedge funds each took a 10% stake in the bank as part of a bailout. The Co-op Group, the bank’s parent company, was left with just a 30% stake, which may have to be watered down further as it struggles to raise even more cash.
Co-op Bank chief executive Niall Booker said the poll marked ‘an important milestone in the transformation of our bank’.
Customers can take part in the poll until 30 June by visiting: www.co-operativebank.co.uk/poll.
‘We have a clear turnaround plan with a vision to create a smaller, more efficient, sustainable bank focused on serving individuals and small and medium-sized business, which is set apart by its commitment to values and ethics,’ said Booker.
‘The Co-op is not like other banks. Our heritage, ethos and values are different. That is why it is so important to renew and refresh our values and ethics to ensure that the next chapter of the bank is true to its heritage and translated to today’s world.’
Booker added the policy was ‘essential’ to ‘helping rebuild trust in the banking sector’.
Many customers will be sure to jump at the chance to demand ‘transparency and honesty’ from the bank and ensure it ‘treats customers fairly’ – two of the options it has added to answer its questions in the poll.
The past year has been tumultuous for the green bank. In May last year rating agency Moody’s downgraded it after a £1.5 billion blackhole was uncovered in its finance. Co-op Bank bondholders, who held permanent interest-bearing shares (Pibs), were forced to bailout the bank by choosing between receiving income or capital back on their investment.
Alongside the bondholder bailout, seven hedge funds took a 70% stake in the bank and Co-op Group was forced to find another £500 million to try and repair the accounts.
On top of this former Co-op Bank chairman Paul Flowers, a Methodist minister, was arrested on drug charges.
In April Co-op Group posted losses of £2.5 billion as a result of the bank failure while the banking arm made a trading loss of £1.4 billion.
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