Banks backlash brings dividend for the Co-op

Published on Thursday 8 July 2010 13:14

THE head of the "ethical" Co-operative Bank claims it has "two to four years" more to capitalise on "consumer negativity" towards big banks.

Neville Richardson, newly installed chief executive of Co-operative Financial Services (CFS), said he believed a pledge by the bank last month to pump a further 200 million of loans into the renewable energy sector this year would also sharpen its competitive edge.

Richardson said the negativity towards its rivals arose from their near-collapse and the taxpayer bailout of swathes of the publicly quoted sector. He added that the Co-op's work on renewables would attract a new, "green-conscious" generation of younger, retail savers.

Richardson told Scotland on Sunday: "That window of opportunity against the big banks is still very much open. I believe we have another two to four years to benefit from the anger and distrust people feel towards the big banks.

Richardson said that the Co-operative Bank was not interested in either private equity or investment banking.

"We have been successful through the credit crunch and the government has not had to put equity into us," he added. "That's not by chance. Private equity stakes are high risk, high reward. Our (mutual] members want us to be in it for the long-term, not in for a fast buck."

CFS last month said it had allocated another 200m in funding this year to the renewable energy sector, most of it in Scotland.

Richardson said: "Younger people leaving school and university are very keen on banks backing such projects and if they see us doing this on the corporate side it won't harm our future retail customer base either. It could really help our retailing side."

CFS — which also includes Britannia since its merger last year, The Co-operative Insurance, The Co-operative Investments and internet bank smile — currently has a corporate balance sheet of 10bn, having risen 20 per cent, 20 per cent, and 10 per cent over the past three years, according to Richardson.

In March, CFS revealed that its underlying profits last year rose 21 per cent to 177m.