Tuesday 24 September 2013

Facing down the Co-op vulture funds

I have had a number of bank accounts with the Co-op for some years now. I’ve complained about them occasionally but, overall, they are light years ahead of the service you get from any one of the big banks, which are like a brontosaurus in comparison, unaware of activity from their own tail.

I believe the difference is that the Co-op is part of a mutual. I am theoretically part owner, and that word 'theoretically' is part of the problem.  It means far too little in practice.

It also failed to prevent the Co-op’s previous management from buying Britannia Building Society, along with all their voluminous debts. Consequently, they are now in some difficulties. I can’t help feeling that, if Co-op had felt a little more like a mutual, that fate might have been avoided, but we shall never know.

They are not in so much difficulty that they have been unable to agree terms with creditors, and he we come to the nitty-gritty.

Because two creditors, American hedge funds which bought into the debt in the summer – particularly notorious vulture funds – are objecting to the plan. They are trying to force the Co-op Bank to abandon its mutual status and be listed on the stock market, though Co-op group will remain the majority owner.

Many of this predatory group remain secret.  A Co-op committee is now deliberating over whether they are right.

It may be a little portentous to put it like this, but: nobody has asked me.

I believe that, technically, I’m not a co-owner of the bank. But I am a customer and a stakeholder, and I did not become a customer to be taken for granted – or to be the customer of a bank listed with shares that can be bought by speculators, at the behest of hedge funds.

Apparently, they believe I will be there as a customer whatever they do. It seems to me that, by making clear this isn’t the case, we might prevent the hedge funds having it all their own way.

If they win this battle, I hereby promise to close my Co-op bank accounts and credit cards, and withdraw my savings from their savings funds, and do whatever I can to leave them with an empty shell.

Who is with me?


Daniel said...

I am with you. But sadly perhaps not enough other account holders. Of course the hedge fund wants the bank to float because then it can be sunk in a sea of speculation and asset stripping.

It might just be a few of us who would make the protest with our feet and then where do we go? Is there any bank left that exists for its customers and can stave off the attention of the city which really doesn't allow any competition outside its closed group of big boys?

David Boyle said...

Well, there is the question. But there are a number of emerging banks which are at least devoting themselves to high street banking, from Handeslbanken to TSB. I suppose what I am saying is that anything is better than being the flotsam on a sea of hedge fund speculation - and if enough of us say so now, the hedge funds will be unable to push their plans through.

Tom Castell said...

I have banked extensively with the Coop on the understanding that it was a mutual with ethical values. I am hugely disappointed in the way it has obviously been run over the last few years and the inability of the board to provide proper oversight. If this deal goes ahead it will make a joke of everything the Coop was supposed to stand for. As a consequence I will move all my accounts elsewhere probably to Nationwide. As many customers of the Coop have similar reasons for banking with them I would not be suprised to see them taking similar action.