Sneezing in Manchester: the wider effects of the Co-op Bank’s difficulties

There’s a twitchy feel at the moment around Manchester’s cooperative quarter, where I was this morning.  This is the historic area near Manchester’s Victoria station where many of the most important institutions in the British cooperative movement (including Co-operatives UK, the Co-operative College and the Co-operative Press) have their offices… just down the road from the Co-operative Group’s sparkling (hubristic?) new office block.

The twitchiness comes of course from the Group’s current financial plight, brought about by the capital shortfall faced by its subsidiary, the Co-op Bank. The Bank will be going public soon on the precise deal it is proposing to its corporate and private bondholders.  But there is an expectation that the Group will be entering a period of considerable retrenchment – and that this will directly affect many other parts of the coop movement which directly or indirectly rely on the Group’s support.

This is the drawback of having the ‘one big society’ which the British coop movement talked about and debated for almost a hundred years before finally the Group came together at the start of this century.  When things go well, big can be beautiful.  But having all your coop eggs in one basket means risking much more when things go wrong.  As a senior figure in the movement put it to me today, “When the Group catches cold we all sneeze”.

Talking of the Bank and its need for private capital, Co-ops UK has moved quickly to commission coop historian and academic Johnston Birchall to write a report on experiences elsewhere in the world where cooperatives have brought in external minority investors.  Johnston’s report Good governance in minority investor-owned co-operatives is out today, and looks very valuable.  I hope to read it and offer some comments tomorrow. In the meantime Co-ops UK’s Ed Mayo has a thoughtful blog on the same subject.  Well worth a look.

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