For many people concerned about the impact of their investments, The Co-operative Bank has long been seen as a natural choice of bank account provider, both as part of a co-operative owned and controlled by its members, and as the only bank on the high street with a clear Ethical Policy on what it does with customers’ money.
Ethically-motivated customers have been observing the unfolding drama at the bank with considerable concern. It now seems certain that the bank’s recapitalisation plan will go ahead. The Co-operative Group will retain just 30% of shares, with the rest owned by a mix of retail investors, and most worryingly, a group of six or more hedge funds. CityWire reports that shares in the bank will start trading on the London Stock Exchange as soon as 23rd December. Many are asking themselves whether now is the right time to switch.
The Save Our Bank campaign has been set up in the firm belief this would be a tactical mistake. If those customers most concerned about ethics drift away one by one, we lose all influence with the bank, making it much easier for the hedge funds to lobby for the Ethical Policy to go. As Ethical Consumer’s Rob Harrison has pointed out, “The bank’s new owners need to understand that if the bank abandons its ethical principles then millions of customers will abandon the bank. If this happens the Co-op is dead in the water and their investment will be worthless.”
The bank has turned away £1.3 billion in lending since 1992 to businesses that didn’t meet the ethical standards dictated by its customers. This means loans for the oil, gas and coal industry, loans supporting arms sales to oppressive regimes, loans to manufacturers of harmful, bioaccumulative chemicals, and loans to companies failing to uphold basic labour standards. In most cases, other British banks will have stepped in to make these loans.
Instead, the bank has built up an expertise in serving small businesses and providing free banking for charities, social enterprises and the credit union sector (as well as providing services to local authorities and building an expertise in renewable energy – areas which sadly look set to be closed or sold). The Ethical Policy has also been the backbone of a series of hard-hitting campaigns, which have included supporting Friends of the Earth’s Big Ask campaign, which helped to secure the UK’s Climate Change Act.
While it’s evident from recent events that strong ethics are no substitute for good governance, this is no reason not to demand both. The only thing standing in the way of the bank’s Ethical Policy being quietly shelved is the customers who will leave if this happens. Despite running ads boasting that ethical banking “has always been in our DNA; now it’s in our constitution”, the new bank’s articles of association don’t explicitly mention the Ethical Policy and won’t do enough to protect it. However, if we stick together we can do just that - thousands of customers watching the bank’s every move, ready to switch if the policy is watered down in any way.
Few of us are happy that hedge funds will have a significant stake in the business, and the campaign’s second goal, alongside protecting the ethics, is to campaign for the bank to be returned to mutual ownership as soon as possible. There are a number of ways this might happen, and we’re exploring these with our supporters.
The more concerned customers of The Co-op Bank we can rally together, the more of a chance we will have of keeping the bank ethical and ensuring it returns to majority customer ownership as soon as possible. If you are a customer, please join the campaign here and help us spread the word.
Ryan Brightwell is a researcher with BankTrack, founder of the research consultancy Bright Analysis and a former employee of The Co-operative Group.