Never another Co-op Bank… can we develop coop-friendly ways to find capital?

So, OK, let’s pretend to turn back the clock and discuss what the Co-operative Bank could have done differently.

More broadly, let’s discuss how a large cooperative organisation that finds itself undercapitalised, for whatever reason, can access the capital it needs in ways which don’t put at risk the key cooperative principle of delivering benefits for members rather than for investors.

It would have been nice to think that other cooperative banks and financial institutions around the world could have stepped in and joined the Co-operative Group as co-shareholders in the Bank.  It didn’t happen, although I understand that the Bank’s then Chair Paul Flowers did have early discussions with major coop banks in both Europe and North America.  For whatever reason, no deals were done and instead the hedge funds came storming in.

But there’s a more fundamental reason why this didn’t happen, and that’s because the international cooperative movement hasn’t really developed yet the sophisticated financial instruments which would enable coops with capital to invest to be able to put their money into coops which need capital – or for that matter how institutional investors such as pensions funds could also invest easily in coops.

The good news is that the International Co-operative Alliance is now taking a serious interest in this issue.  There was an excellent session at the ICA’s Cape Town conference this morning to launch what the organisation is calling its ‘Blue Riband’ commission, specifically to address issues of capital for coops.  The Commission’s Chair Kathy Bardswick (CEO of Canadian insurers The Co-operators) led the discussion, claiming that every coop at some stage of its life needs to find business capital. “How do we ensure that there is reliable and available capital without having to jeopardise the concept of member control?” she asked. She admitted that at the moment there are more questions than answers.

She has some of the best global cooperative talent working with her on the Commission:  Tan Suee Chieh of the Singapore cooperative confederation NTUC Enterprise, Bill Cheney of the US credit union organisation CUNA, Arnold Kuijpers the Director for Corporate Affairs of Dutch coop Rabobank and Monique Leroux of Desjardins (Canada). But Kathy Bardswick also called on the broader cooperative movement to feed in their questions, ideas and suggestions. Already I gather that Co-ops UK may be interested in supporting some serious work in the UK around cooperative capital, revisiting perhaps some of the early research which led to the book Co-operative Capital ten years ago, which you’ll find on my website

The Co-op Bank disaster has surely taught us of the urgency of this issue – but also of the need to address this internationally, rather than at national level. It is too late to save our own Co-op Bank, but not too late to develop innovative capital solutions which could yet ensure that other cooperative institutions don’t end up demutualising.

I have only one question:  why the name ‘Blue Riband’ for this Commission?  Wasn’t Blue Riband a type of chocolate bar?

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