Ritchie on the Co Op Bank

This is fun, innit?

And heads need to roll. Whole rafts of senior bankers need to leave the industry: their mentality is corrupt and has to be swept away. There will be decent people who can take their places: have no doubt about it. But it will take leadership from a new type of non-exec director dedicated ti making banking work again that will let this happen. Again, I think such people exist; they’re just the outsiders now. The farce that the Coop was told recently that its board was not suitable to run a bank because it was not made up of bankers has to go: it’s precisely because people are not bankes that they may be suited to their new roles of making sure banks are clean, although competence will also be important too, of course.

Given what we\’re hearing about the Co Op Bank currently.

So\’s this amusing:

Disclosure: I bank with the Cooperative Bank. I have advised them on tax issues.

12 thoughts on “Ritchie on the Co Op Bank”

  1. Competence you say Ritchie?

    I would say a little more disclosure is necessary here. What advice exactly did you give them? Was any of it related to the tax treatment of bad or doubtful debts? As tax is a matter of morality (which you insist it is) did you advise a tax-paying position when as we all now know this was a serious loss-maker?

    Oh…and in which entity did you enter the fee you received for this advice?

    I’m sure Ritchie would agree that a thorough enquiry is the only way to get to the bottom of this.

  2. Also from Ritchie today:

    ‘If you want to know what the PAC hearing on Google is all about, read my book; “Over Here and Under-Taxed”, available here: AMAZON.’

  3. Didn’t we have an experiment with people with no bank experience running a bank?
    Andy Horby joined HBOS (then Halifax) from Asda and stayed until HOBS had been run into the ground with bad loans.

    The Co-Op board problem was that they have a byzantine governance structure and most of the top level board members (including a Methodist minister, a part time civil-servant and a youth and community worker) wouldn’t pass the FSA approved persons test (i.e. be compentent in running a large bank).

  4. So presumably RM advised them on this from January 2013, then:

    http://www.co-operativebankinggroup.co.uk/servlet/Satellite?c=Page&cid=1357284286482&pagename=Corp/Page/tplCorp&currart=1359444227529&currmth=1

    “Co-Operative Bank plc (The Co-Operative Bank) has entered into a transaction whereby it has transferred a mezzanine portion of the risk in a portfolio of residential mortgage loans originated by its subsidiary, Platform Funding Limited to third party investors via the issuance of £116.5m of funded notes by an orphan special purpose vehicle incorporated in Ireland, Calico Finance Number One Limited (Calico) (the Transaction).”

  5. Terrible strategic and tactical decisions that sank HBOS were, to be fair to Andy Hornby, made under lifelong banker James Crosby before his retirement.

    Hornby was handed the time-bomb (and didn’t realise that it was one, and let it go off in his face), but he didn’t create it. I don’t think a non-banker would have been able to do what Crosby did, since initiating a culture of bullying risk managers to ignore risks is only really possible if you understand what risk managers do.

    Separately, the UK banking crashes also taught us that a member of the provincial aristocracy is a less-than-ideal choice as bank chairman.

    The strong version of that theorem is that having banks outside of London is a bad idea, because the people there aren’t really bright enough to understand what they’re doing.

  6. So Much For Subtlety

    If I remember right the Co-op – not the bank I assume but the parent group – was one of the larger funders of the Labour Party. They lent something like 3 or 4 million pounds to Blair and Brown.

    Which they have not got back as far as I know.

    So I think their competence issues go deeper. And perhaps now is the time to call on the good Comrades to repay it so all those poor middle aged working class Mums do not end up out of pocket. Ed?

  7. SMFS: Technically, I expect they funded the Co-operative Party, which just happens to be in a permanent alliance with Labour. Hence some MPs, including laughably Ed Balls, are Labour-and-Cooperative. Balls hasn’t co-operated with anyone since primary school, I’ll be bound.

  8. Depends what you mean by *funding*.

    The Co-op group only gives modest (£100k p.a.) donations to the actual Labour party, but as Philip Walker says it gives much more (£750k p.a.) to the Co-op Party which is in permanent alliance with Labour.

    But the Co-op Bank itself is a major lender directly to the Labour Party. Guido says £3.5 million, which I think is an old loan secured on the Labour Party headquarters.

    That dates back to the time when Blair was caught doing cash for honours and that source of funding dried up. Interestingly the then chief exec of the Co-op bank got a knighthood after the Labour party loan was negotiated.

    The Labour Party also had an £11 million overdraft with the Co-op Bank, which they all claimed was on normal commercial terms. I don’t know what happened to that.

  9. Interestingly if you google Labour and co-op bank you come up with a lot of local joint campaigns against doorstep lenders.

    Social conscience, or the bank paying Labour to wipe out some of its competitors?

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