A bad year just got a lot worse for the Co-op
As long ago as April I penned a piece for The New Statesman entitled The Co-op has had a bad year. Given the events that have transpired since that article appeared in April, I was being generous in merely describing it as a bad year, writes Douglas Blakey
As long ago as April I penned a piece for The New Statesman entitled The Co-op has had a bad year. Given the events that have transpired since that article appeared in April, I was being generous in merely describing it as a bad year, writes Douglas Blakey.
With the tabloid press pack on his trail, one has some small degree of sympathy for the former Co-op Bank chairman Paul Flowers, notwithstanding that his downfall from the bank, his church and Labour Party are self-inflicted own goals.Putting to one side the tittle-tattle of salacious past personal misdemeanours, his track record as chairman of the Co-op Bank was pretty lousy.
Flowers’ chairmanship of the bank also coincided with the Co-op becoming the least generous UK banks in terms of charitable giving.To much for the ethical bank. Prior to Flowers becoming Coop Bank chairman, the Coop was the most generous UK bank to charity.
In the period covering fiscal years 2006 to 2008, the Co-op Bank donated 0.98% of annual revenue to charity. In 2009, the figure dropped to 0.3%. In 2010 and 2011, when Flowers was chairman, the Co-op Bank donated a mere 0.04% to charity – the least generous of any major UK bank.
By contrast, the Coop Bank increased its political donations. And no, no need to ask which party was the grateful recipient of the Co-op Bank’s generosity. In 2008, it gifted over £600,000 – that figure had risen to £880,000 in 2012.
The events of 2013 as a whole raise a whole host of serious questions for the Co-op Bank. First off, it needs to sort out the damage incurred to its brand. If there is any consolation for the beleaguered new bank management, Coop Bank customers are among the most loyal in the country.
In terms of customer service satisfaction surveys, the Co-op tends to rank a consistent second or third among UK banks: First Direct tops such polls with almost monotonous regularity while Nationwide and the Coop fill the next two spots. Is it appropriate to retain the Co-op Bank brand?
Is it credible for the bank to continue to describe itself as the ethical bank, given its impending majority ownership by two US hedge funds? It also faces major channel distribution challenges. It plans to axe around 1,000 jobs and close 50 of its 325 outlets.
It is making such cuts without an obvious cutting edge digital channels strategy in place. If it gets anything right in the short term, it needs to ensure that its mobile banking, tablet and internet banking platforms are optimised. It seems another age when Co-op Bank managing director Rod Bulmer told me, in 2011, that he planned to grow the Co-op branch network to at least 500 outlets, whether or not the deal to acquire the 632 branches from Lloyds came off.
Said Bulmer, the Co-op needed 500 outlets to have national scale. Bulmer also talked about boosting its branch strategy by featuring in-store bank branches within Co-op supermarkets. By chance, such a strategy is to be piloted by Barclays with four in-store branches within Asda supermarkets. If and when the Co-op Bank sorts out its short term priorities, there might be merit in dusting off Bulmer’s in-store supermarket branch project.