Tuesday, 5 November 2013

Swansea City FC and the Cooperative Bank

Having read the Post's report of chairman Huw Jenkins' thoughts on Swansea City, I trust the club will continue to do things the right way. The nub was "that's the biggest challenge I've got, to make sure that [...] everybody working with the club believes if we keep doing things differently, we can compete, irrespective of the size of the club or budgets." I believe that the reckoning will come for the clubs whose current success is dependent on individuals whose wealth may be transient. I also believe that some would not stand prolonged scrutiny by Her Majesty's Revenue & Customs.

It seems to me that the failure of the Cooperative Bank resulted from a desire to compete with the Big Four, adopting their tactics and neglecting the bank's stated principles. If they had stuck to the latter, they would have found that the field had "come back to them" in racing parlance. For instance, they have a bill for mis-sold PPI just like the others.

Then there was the purchase of an overvalued asset in the shape of the Britannia Building Society (rather like a certain club owner - allegedly). This acquisition was convenient - I put it no higher - for the Labour government in that they could claim that no major building society was forced to close as a result of the credit crunch under their stewardship. Unfortunately, the Coop did not benefit from a sweetener from the taxpayer as the Nationwide did when they took over the Dunfermline. Ironically, Labour would have found it electorally dangerous to bail out the Coop as they had with the outright capitalist banks, especially as the party had - and still has - a large overdraft (reckoned by Guido to be over £3m). The final straw was an assessment that the bank was undercapitalised to the tune of £1bn. Maybe if Labour had been returned they might have softened the blow, but a Tory chancellor was never going to shed tears over the bank's predicament. Osborne probably rejoiced over the hedge funds' success in defeating a previous rescue attempt which would have left the Coop movement with more control over the bank.

Euan Sutherland, the new chief executive, has insisted that the change of ownership will not affect the bank's ethos because it is written into the constitution. However, constitutions can be changed and there was a reminder yesterday of commercial reality with the news that branches and jobs are to go.

1 comment:

Frank H Little said...

Confirmation of Labour's nudging the Co-op to its takeover of Britannia came at a Select Committee hearing yesterday from the former chairman of the bank.