Ursula Lidbitter |
Here is the latest statement from the Co-Op as Len Wardle has resigned as Chairman:
"The recent revelations about the behaviour of Paul Flowers, the former Chair of The Co-operative Bank, have raised a number of serious questions for both the Bank and the Group. I led the Board that appointed Paul Flowers to lead the Bank Board and under those circumstances I feel that it is right that I step down now, ahead of my planned retirement in May next year. "I have already made it clear that I believe the time is right for real change in our operations and our governance and the Board recently started a detailed review of our democracy. I hope that the Group now takes the chance to put in place a new democratic structure so we can modernise in the interests of all our members."
He is to be replaced by Ursula Lidbitter, who has climbed the corporate pile after a long career at the Co Op. She is to lead a root and branch reform of management. Of course, being a co-operative is a bit like being a Union. Non Members need not apply. So how far the reform will really go who knows, but good luck to her.
What though of our Westminster Politicians. They were lining up to praise the likes of Co-Op and the John Lewis partnership just a few years ago. David Cameron had them as the drivers of an inclusive Big Society. Ed Balls had them down as the acceptable face of Capitalism. Problem is that nearly all the mutual building societies have gone under since the Financial crisis or are now stuck offering very uncompetitive products as their cost of capital is now so high. The Co-Op, long a bed-fellow and huge supporter of the Labour Party has come very unstuck too in the Banking game. Those of us old enough to remember will recall the Banking Partnerships of the 80's have long since disappeared. There is precious little evidence that mutuals or partnerships are fairer or better than normal companies. All companies risk appointing coke heads and ego maniacs to the top job if they fail the basic tasks of finding the right, experienced candidates. Once you have a demonic leader, as the Country found with Gordon Brown, the road to ruin is true and straight.
So what now can the politicians who seek an alternative to Limited and Public companies do - the options are more limited with a return to State sector or perhaps a hope that State Owned Enterprises of other Countries, like the Chinese ones invited to build our new nuclear power station, maybe the answer....
16 comments:
Interesting final comment. Chinese to run our banks?
They seem to be out-capitalising the capitalists in the last few years so Yes?
Is it the mutual structure per se that is the problem or the culture of some mutuals that is the issue here?
What a good idea! Unfortunately, the Chinese banks are in a worse position than ours.
Agree CU.
Apply the simple formula: create a level playing field with a strong but straightforward regulatory environment which is focussed on ensuring vigorous competition, and keeping barriers to entry low. Set the rules so they are basic and understandable and are difficult to "game".
Then nobody has to worry about ownership structures, recruitment policies or business ethics. If we had a proper regulatory system it would not have mattered a jot if NR, the Coop et al. had gone wrong. Customers could simply up-sticks and find someone else to bank with.
The problem is not that there isn't enough regulation. According to the regs, Flowers should never have been appointed!
I do not really want chinese banks running ours - but Labour will if the alternative is Goldmand Sach running them or hedge funds as is now the case with co-op. The Left's anything-but-capitalism approach is leading them down this road.
BE - Yes, although the FCA is quite pedantic about who gets top jobs now which is a good lesson from the Financial Crisis. Flowers got hsi job beause Ed balls and Gordon Brown waved it through - this is the political back-drop to the crisis writ large.
not an original comment - but when you try to run a business with any driver other than profit, you run horrible risks of coming unstuck
(real-world business: I exempt various 'lifestyle' cottage industries)
and of course, not only was the Coop seen by some as the future of ethical banking, it has also been hailed as the future of ethical energy ! some belly-laughs to be had from their website ...
I think it a great pity that the Savings Banks perished: they had a good run; I've seen it argued that it was inflationary postwar economic management by HMG that brought them low.
Anyway, surely one problem is that there is no renewal mechanism for mutuals? Once felled, they're dead. But if a limited company fails, no matter; replacements spring up all the time.
CU precisely what I was saying. Brown and Balls created a system so obtuse, so complex, so badly managed that their mates could be waved through without anyone really noticing. Even Peston seems to have noticed (belatedly) that the FSA should never have allowed Flowers through.
What's the name of the rule that says that when an organisation builds itself a new eco-HQ in Manchester it's time to call in the administrators?
BE: Many businesses fail/fall into crisis when that nice shiny new showpiece head office is built - hubris made visible.
I don't know what the answer is but I'm sorry to see the diversity of ownership structures reducing. Ownership by a trust or charity (John Lewis; Wellcome, before the trust sold out; Robert Bosch) seems good for the long term health of a company. Certainly, publicly traded share ownership --- as currently practiced --- seems a terrible model, with all the incentives being to sacrifice long term growth to enrich management insiders. Maybe multi-generational family ownership (JC Bamford, Clarks Shoes) is the best model we currentlty have,
Family businesses pay the worst in my experience. All the money is kept for the owners and everyone else can slave away for a pittance. Ask BQ industries for their house view.
I am not saying I am happy to see mutuals die, just that Politicians who know sweet FA were so keen to hope there was some bright new idea - rather than as ND says, run things for a profit and manage them for the long-term as good companies try to do.
Clearly, profit has to come in somewhere, but there seems to be an incentive to take profit now rather than act as a steward and nurse a business through to the long-term.
Take a look at any international list of best/most innovative/fastest growing (etc) companies. See if you can spot any UK businesses in the top 10, or even top 100. And this, despite what we're told about the wonders of the City.
Maybe the ownership structure is of less importance than the prevailing moral climate.
Quis custodiet ipsos custodies?
Just as a point of order - Flowers wasn't waived through by Balls & Brown as such - he was sanctioned by the Labour Party which then made representations to Balls & Brown. I don't think either Balls or Brown knew the guy.
To that reasoning i'm not completely sure what the FSA could have done - enforce qualifications that Chairmen can, yer know, count and not take crystal meth? A Chair's much more difficult than a Chief Exec.
Were Co-Op breaking any rules other than being shit? It's not so much regulation as reliable audits. I'm not sure any business model smells of roses at the moment but as mentioned in the thread - this is Union shit and i've spent loads of time round Northern Labour Parties and this guy got the gig because he wasn't someone else. There's no way if he was a known party boy who was thick as fuck that Pickles didn't know him, probably went drinking with the lad.
Personally, I'm thinking where was the bloody ex-Chairman's staff at the select committee? There's no way the FSA can regulate the Northern Labour Party structure but good luck in trying. This isn't a failure of regulation - it's a failure of the Coop as run by dickheads.
Co-op Bank deserves a lot of criticism for this fiasco. But who else has organically grown a reasonably sized retail Bank since the 1980s?
Santander UK is mostly Tony Benn's National Girobank (via Alliance & Leicester).
A few building socs (and ex-building socs) have, but so far they seem to have little impact beyond existing customer base. Some of the large supermarkets are having a stab at it, but don't seem at all big yet.
While they have messed up since taking over Britannia BS, from the lack of competition it doesn't look like the gradual building of Co-op Bank was that easy, and until lately was executed fairly well.
hmmm, seems all sides had their mitts on this one
http://www.ft.com/cms/s/0/2f62d41e-520d-11e3-8c42-00144feabdc0.html?siteedition=uk#axzz2lGyE6jhQ
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