Introduction

In March 2013, the British financial sector was shocked by the news that one of the larger banks in the country, the Co-operative Bank, had accumulated losses of ￡600 million. Later in the year, it emerged that the Bank had a shortfall in its capital of about ￡1.5 billion, putting the bank on the brink of collapse. Until then, the Co-operative Bank plc had been 100 per cent owned by The Co-operative Group. The rescue operation required a major restructuring, following which the Co-operative Group's shareholding fell to 30 per cent. Later, in 2017, in the course of a second restructuring, the Group was forced to sell all its remaining shares, leaving the bank 100 per cent owned by private equity, mostly US hedge funds. The sad irony of the story was that the institution created to advance the principles of fairness, co-operation and mutuality had ended up in the hands of organizations that for many were the epitome of capitalist greed and exclusivity.

Much of the blame for the near collapse of the bank centred on the blatant incompetence of the directors putting in doubt the workability of the cooperative participatory principles, allowing unqualified people to sit on the board of a major cooperative company. The spotlight was on the Reverend Paul Flowers. As Chairman of the Co-operative Bank, he presided over the policies that had led the Bank to a catastrophe. An investigation by the Financial Conduct Authority found Flowers entirely unfit for the job, to which Flowers progressed through the elective processes of United Cooperatives. He had never worked in banking in any senior capacity when, in March 2010, he was put at the helm of the Co-operative Bank – a bank with ￡50 billion of assets, ￡36 billion of customer deposits and 4.7 million customers. However, there were people who saw the problem not in the principle but in its implementation. Rob Harrison, editor of Ethical Consumer magazine and an activist for the Save Our Bank campaign, argued that the implementation of cooperative principles in the management of mutual societies was predominantly a question of training and education: ‘You need to spend lots of money on training people because they aren't necessarily going to turn up with all you need to manage a complicated company.