Since the Co-op Bank announced its intention either to find a buyer or to raise £700m more capital, things have been moving fast. There are many stories in the media, often attributed to 'sources'. While the process is ongoing we will publish a short statement here on our current view.

Wednesday 12 April 2017

Current stories in the media say that the Co-op Bank reports that it has received proposals from more than one potential partner. On the assumption that these are offers to buy the bank there is speculation about who might be in the running. It is likely that we will know more soon, perhaps by the end of this week - this is in line with statements reported previously that the bank wanted clear statements of interest ‘by mid-April’.

We await with interest any announcement about more formal discussions with potential buyers. There remains also the possibility that the bank will find other ways to reinforce its capital position - either as part of a deal with a potential buyer, or as an alternative.

If and when a preferred bidder is announced our aim will be to talk to them as soon as possible. We’ll be asking what they would be prepared to do to meet our demands - we announced these on 23 February.

Depending on the outcome of those discussions we expect to make a recommendation to members of the Customer Union co-operative for a vote on whether or not we will support such a bid.

What the Co-op Group's valuation says about the Co-op Bank (Sky)

Co-op Bank confirms several takeover proposals  (FT - paywall)


Monday 3 April 2017

Our demands

The Co-op Bank has asked for expressions of interest by mid April, or according to some news sources, by tomorrow 4 April.

Our demands of any potential buyers remain as we have previously stated. They follow from our two main aims - to make sure the bank sticks to its customer-led ethical policy, and ultimately to help the bank return to co-operative ownership.

Our demands for any potential deal

1. The Ethical Policy has to stay: Any new buyer must commit to keeping the bank's unique customer-led ethical policy. This includes keeping the resources in place to implement it, and continuing to report annually on the policy's implementation. Also, the policy is only meaningful if it applies to the whole of the bank's balance sheet. This means if the Co-op Bank is absorbed by another bank, the ethical policy must be taken on as well by the larger bank - unless the Co-op Bank maintains a separate balance sheet and operational independence.

2. There must be a commitment to customer ownership: As a bank which is committed in its articles of association to co-operative values, we want to see the Co-op Bank seek co-operative sources of capital. That means seeking buyers from the co-operative and mutual sector, and seeking capital from the bank's own customers. We also want to see the Co-operative Group retain its stake in the bank, unless it sells to another co-operative or mutual. If another bank or a company from outside the co-operative sector buys the bank, it must commit to meaningfully protect the bank's co-operative heritage by committing to ensure a co-operative voice in the bank's management, such as by creating a co-operatively owned shareholding.

Co-op Group writes down stake to zero

There are reports in the media that the Co-op Group has 'written down' its 20% stake in the Co-op Bank to zero. 'Sources' said this reflected a conservative view by the Co-op Group.

Our view is this:

The view that Bank shares may be worthless has been suggested since the collapse in 2013, so is not new. It is good news that the Group is in a strong enough financial position to write off the loss without a threat to its wider businesses.

We believe the continuation of a sustainable ethical challenger bank with an identifiable co-operative stake remains the best outcome for the majority of stakeholders.

For that reason we call on the Co-operative Group to join with us in pressing for a new ownership structure that puts customers at the centre of the bank’s future and helps strengthen its connection with its co-operative heritage.

Risks for customers

Some supporters have expressed concern to us about the future of the Co-op Bank and any risks for customers.

Neither the Customer Union for Ethical Banking nor the Save Our Bank campaign are qualified to give financial advice.

We continue to believe that it is only by sticking together that we customers will have the most influence over what comes next.

The Financial Services Compensation Scheme protects the first £85,000 of deposits. The Co-op Bank makes clear: "Like all banks, customers are protected by the Financial Services Compensation Scheme (FSCS), an in institution which covers customers of all banks for up to £85,000 of retail deposits."


Customer Union and Save Our Bank Team