THERE was almost bound to be an element of “After the Lord Mayor’s Show” about the evidence to the Treasury select committee yesterday of (yet another) former Co-op Bank chief executive, David Anderson.
After all, he was onstage virtually only hours after the resignation of the bank’s chairman, the Rev Paul Flowers, brought low by the Crystal Methodist drugs scandal, and the early retirement of Len Wardle, long-standing chairman of the parent group.
Wardle felt that he had to carry the can for being part of the board that appointed Flowers, who got it wrong so egregiously at the same Treasury committee last week when asked about the size of the Co-op Bank’s balance sheet.
He said £3 billion when it was £47bn. A miss is as good as a mile, as the proverb says.
The ineptitude of that performance by Flowers, and the questions that it raises about how the Co-op Group and the now-defunct Financial Services Authority (FSA) signed off the wayward reverend’s appointment, were bound to overshadow what Anderson had to say.
Not to mention the root-and-branch review of the Co-op’s governance that has been launched in the past 48 hours, which undoubtedly spells the end of the gentleman amateur days at the self-styled “ethical bank”. Member democracy may have to give way to efficiency.
Anderson’s evidence, while low-key by comparison, was still worth hearing. He initiated the talks with Britannia Building Society that came to fruition with the Co-op Bank merger in 2009 when memories of the financial crash of the previous year were still fresh.
Anderson said that, despite this inauspicious industry backdrop, nobody was dismissing the merger as “daft” at the time. The FSA did nothing to stop it. Three years after the deal went through, the Treasury was hailing the merged entity as a well-capitalised mutual.
Anderson, admittedly with a vested interest in protecting his reputation (he left the company after the deal went through), reckons Britannia’s flaky commercial property lending book was not enough in itself to undermine the Co-op Bank as an independent entity.
He claimed other factors included IT problems and the subsequent abortive attempt by the enlarged Co-op Bank, intoxicated by its Britannia “success”, to acquire more than 600 Lloyds branches.
In other words, it was a litany of problems rather than just a bespoke Britannia challenge that brought the bank into the hands of hedge funds (praise be upon distressed loans players).
It has been an extraordinary soap opera at the Co-op, with Anderson adding some more historic texture. The “ethical bank” has become a morality tale.
Low-cost rivals with a different story to tell
IT MUST be gratifying for EasyJet to post a sharp rise in annual profit as rival no-frills operator, Michael O’Leary’s Ryanair, hits trading turbulence that has led to an unaccustomed bout of soul-searching at the Irish airline.
Of course, EasyJet, with its continuing high-profile sniping with Sir Stelios Haji-Ioannou, founder and largest shareholder in the company, has also had its unpleasant share of publicity.
But it always helps if that background static is leavened by profitable trading and a special dividend.