Lord (Paul) Myners loaded the gun, handed it to the Co-op Group’s top brass, stared them down and they blinked first, pointed the weapon to their corporate heads and pulled the trigger.
The Co-op Group’s decisive meeting last Saturday was one that should have drawn a line in the sand over the competing paradigms battling to dominate one of the country’s leading mutual societies. Lord Myners had earlier thrown down the gauntlet, supported by former chief executive Euan Sutherland, accusing the society’s board of all measure of incompetence.
But the real battle went – and continues to go – far beyond a so-called ethical bank that had long lost its way before conventional wisdom determined that it was the merger with Britannia Building Society, the hiring of the debauched Paul Flowers as chairman of the bank and the misguided Project Verde.
All these developments took place under top class and independent financial advice from some of the leading City institutions. Nothing unusual there.
Some may say the rot started under the leadership of Sir Mervyn Pedelty and his misguided attempt to make the Co-op Bank the equal of the big retail banks during his period as CEO between 1997 and 2002. It was then that the Co-op Bank set out its stall as a major player, punching above its weight, trying to keep pace with the big battalions during the boom years.
Sir Mervyn was determined that the Co-op Bank would not be left behind, urged on by all those who praised him for ‘modernising’ the mutual society.
He set about expanding the bank with new products and merged with the Cooperative Insurance Services, creating the Cooperative Financial Services.
Sir Mervyn, who became head of the new organisation, went for expansion and profitability, with a tornado-like force. He launched Smile, the online banking which was relatively successful, eventually launching a full internet banking service, the first in the UK. There was massive growth in the expansion of ATM machines, new outlets and a deal with the Post Office.
Sir Mervyn also tapped in to the growth in residential mortgages, a competitive cash Isa and for his foresight and innovative leadership, he first became an adviser to the department of work and pensions, then received a knighthood for his contribution to financial services.
While paying lip service to ethical standards, Sir Mervyn had lost sight of the important level of service that those who flocked to the Co-op Bank expected.
This was the period when the Co-op Bank had clearly abandoned its fundamental values and objectives, leaving a few account holders and members calling out for a change of direction, but to no avail. There are questions to be asked about the merger with the Britannia, but not the ones that Lord Myners and critics of the Co-op Group and, implicitly of mutuality, have been asking.
