Co-operative News - Financial

Co-operative Group drops deal for Lloyds branches

Anca — Tue, 23 Apr 2013 14:51:54 +0000

The Co-operative Group has withdrawn from the deal to acquire 632 Lloyds Banking Group branches and the associated 4.8 million customers.

According to the Group's Chief Executive, Peter Marks, the decision to back out is due to the economic downturn and increasing regulatory requirements. He said: “After detailed and thorough consideration of all aspects of the Verde transaction, we have decided, at this time, that it is not in the best interests of our members to proceed with the transaction. Having worked closely and constructively with Lloyds we are naturally disappointed to have reached this conclusion.

"However, against the backdrop of the current economic environment, the worsened outlook for economic growth and the increasing regulatory requirements on the financial services sector in general, the Verde transaction would not currently deliver a suitable return for our members within a reasonable timeframe and with an acceptable level of risk."

A successful deal would have tripled the Co-operative Bank’s branch network, with the Group becoming a major competitor to the big four UK banks.

The state-rescued Lloyds bank was being forced to sell the branches under European Union competition rules before the end of November. The cost for the Group was due to be £350m upfront and an additional £400m based on performance targets before 2027, which would have taken its market share from one to seven per cent, with a total of 11 million customers.

The decision to drop the deal with Lloyds came three months after the Bank’s finance chief, James Mack, had quit. Press speculation at the time said the deal was under pressure due to the departure of Mr Mack.

Mr Marks added: "The Verde transaction offered a significant opportunity to The Co-operative and the sector as a whole as it would have created a major challenger bank. It was right therefore, for us to explore it in the detailed way we have. We were, however, clear from the outset that Verde was a complex transaction and that this was not the only option open to us to develop our Bank.

"We remain committed to driving the Co-operative Group forwards under our clear strategy and, as part of that, we will continue to develop our Bank for the long-term, offering a real alternative on the high street with our strong, established brand and our reputation as a trusted financial services business."

In the last financial year, the banking arm of the Co-operative Group accounted for a £600m loss in 2012, in a year which was described by Mr Marks as a challenging one. The Bank spent £150m to cover claims for mis-sold payment protection insurance. Losses in the banking arm of the Group were also caused by a £150m writedown of IT systems and £377m of bad loan losses.

Last month it was also announced the Group was to sell-off its insurance business in two parts, which would raise capital to allow the organisation to focus on its "relationship banking activities" and "strengthen" its capital position.

António Horta-Osório, Chief Executive of Lloyds Banking Group said: “We are disappointed that the Co-operative Group is unable to complete this transaction. However, we are well advanced in our plans to bring the Verde business to the UK High Street during the summer through the TSB Bank, and will now proceed with the option to IPO the business, subject to the necessary approvals. The TSB Bank will be an attractive retail and commercial bank that will have around 630 branches across the UK, a strong management team and will be a real challenger on the high street.”

Co-operative Energy is switched on to the market

Emily Barker — Fri, 30 Nov 2012 13:28:53 +0000

Energy is making headlines. This month, SSE – Scottish and Southern Energy – announced its half year profits for the period ending September rose by 38 per cent against the same period last year, to £398 million. Despite this, SSE increased its domestic energy prices by an average nine per cent from October.

Meanwhile, British Gas is raising its prices by six per cent; Npower by nine per cent; Scottish Power by seven per cent; and EDF by 10.8 per cent.

In contrast, one of the newest and smaller suppliers has cut its electricity prices — bringing them down by two per cent from 21 December. This is despite the fact that this supplier — Co-operative Energy — was already more than competitive in its pricing. It claims that it will now be £88 cheaper for an average standard tariff where the customer pays by online direct debit and £178 cheaper for someone paying quarterly on credit, compared with the Big Six energy suppliers.

The price cut was immediately praised by consumer champion Which?, whose executive director, Richard Lloyd, said: “Rising energy prices are one of consumers’ top concerns, so this is welcome news from Co-operative Energy at a time when millions of household budgets are squeezed. Customers being hit hard by big suppliers’ price rises should now ask why it is that Co-operative Energy can buck the trend.”

An endorsement by Which? is welcome, but unsurprising. In May, Co-operative Energy beat all its major competitors in bidding for a mass switching exercise hosted by Which?. As a result of offering the best fixed price tariff, 22,000 consumers switched to Co-operative Energy. In fact, more wanted to move over — 280,000 consumers had registered for the exercise — but were told that only a limited number could do so.

The restricting factor, Nigel Mason of Co-operative Energy told the News, was that it had necessarily entered into supply contracts to deliver against the fixed price that it had bid at. It turned out that the number of consumers seeking to switch far exceeded the size of contract that had been pre-arranged.

“In May this year we were a smaller business, even though it is only six months ago,” explains Mr Mason. “That was a fixed price tariff. We entered an auction and promised to offer a fixed price. We had only bought a certain capacity for that auction.” But the issue was not, stresses Mr Mason, about the co-op’s operational capacity. “Most of our business is online and there is no capacity issue,” he says. “There was a sub-text, which was that this was the first time we had taken on 22,000 people on one day! We had to ensure we did that well.”

And, insists Mr Mason, the exercise in fact went without problems. “I think it went very well indeed,” he says. “We did an online survey of those 22,000 and got a 48 per cent response rate. I have never known a response rate on that level. Which? subscribers are really active consumers. Most respondents said it was too early to tell, but most who did give an answer were overwhelmingly positive.”

Since then, Co-op Energy has grown significantly larger and now has a customer base of 65,000 accounts. The business offers energy across all parts of Great Britain, though not in Northern Ireland — which has a different regulatory environment. Readers will be pleased to learn that the high rate of growth is directly related to the business’s co-operative trading model.

It now feels rather surprising that Co-operative Energy is a mere 18 months old — but with the amount of positive publicity in the national media it is unsurprising that the business is growing quickly. Progress, says Mr Mason, is “very good” and the co-op is signing up large numbers of new customers every day.

“Autumn is always busy for energy suppliers, especially for us because energy is in the news,” says Mr Mason. “It spurs people into action. The challenge for this industry is how inactive most people are. There is great inertia.

“The plan is total growth,” he adds. “I always thought that potentially we could be as big in energy as the bank is in banking. The co-op model makes perfect sense in energy — ownership by customers is the fairest way of delivering energy. It is the Rochdale Pioneers’ philosophy.”

Competitors offer so many different price tariffs and contract arrangements that this leaves consumers confused and increases trading costs for them, suggests Mr Mason. “We have an incredibly uncluttered and simple business model. Others [competitors] are sinking under the weight of their complexity. We are growing very quickly, mostly online and there is potential point [of competitive advantage] there.

“We don’t spend much on marketing. Co-op activists say why don’t we shout about ourselves from the rooftops, but I’m afraid that costs money.”

Given the context in which corporates have grown on the back of their advertising spend, not the quality of service or the cost of their products, no one could reasonably complain about Co-operative Energy going back to the Movement’s principles. Long may they continue to do so.

Co-op combats deforestation in Bolivia

Anca — Mon, 26 Nov 2012 12:26:36 +0000

The Cochabamba Project combats deforestation by working with poor smallholders in the Bolvian Amazon, Co-op News talked to the Director David Vincent.

In 2008 David, an Investment Financial Advisor, decided to start the Cochabamba Project, based upon the pilot project ArBolivia. Members provide finance for local smallholders to plant native species of tropical hardwoods as an alternative to unsustainable farming practices.

The Cochabamba district has been the scene of some of the most aggressive deforestation over the last few decades.

The minimum investment is £1,000 (which can be paid in instalments) and the maximum (by law) is £20,000.

David said: “I wanted to look at a different way of investment for the benefit of society. In this model you had a direct say in how money was handled and pull efforts together. I had been one of the few IFAs in the country supporting ethical investment.”

The project was developed by Anko Stilma an expert in international forestry at the UN Food and Agricultural Organisation.

David said the Cochamabba Project was based in Bolivia because of its’ strong community links and co-op structures.

“Bolivia has a very well developed co-op culture. That’s what makes it work as a project. Those structures are already in place. Whole community groups migrating from one area to another has caused deforestation. People move and communities are left without revenues;” he added.

In 2009 the Bolivian Government didn’t sign the Copenhagen Accord, which underlined climate change as one of the greatest challenges of our time. David explained it had a great impact on Cochabamba Project, because people thought deforestation was not a key issue on the Government’s agenda.

Luckily the society had already raised £650,000 to develop the project, but they had to continue fundraising.

David said despite some improvements, the project could bring more benefits if it had a more capital.

He explained that for every hectare planted-at least 0.2 of a hectare is dedicated to conservation.
“Deforestation means land heats up more quickly, so a lot of the conservation is around protecting water courses. Another one is creating link corridors between forest for animals to enable them to migrate.”

The Project helps to tackle climate change, poverty reduction and promotes biodiversity it also encourages people to co-operate, whether they are migrant or indigenous communities, for the benefit of the whole community and involves women and elder people, he added.

“We’ve just been out there for a second time and we have seen the same people as two years ago, they have prospered. They are more confident about their future. Is not just about farming and providing them with a better, but organising themselves, taking control of the situation.”

David Vincent said he welcomes the involvement of other co-ops and potential investors.

“If other co-ops have something to offer, we would like to hear from them. We are running an operation on limited resources and we are making a real impact. We can have a bigger impact with bigger help. It would be great if we could expand what we are doing to other countries.”

Don Segundino, a farmer from Cochabamba explained at the very beginning local people doubted the project. After starting to plant trees jointly with one of his neighbours, the farmer realised he needed to join an organisation to gain more power.

The Cochabamba Project is a fully trading Industrial Provident Society, working in equal partnership with poor smallholders on the fringes of the Bolivian Amazon to establish and maintain a profitable and sustainable community-based forestry enterprise as part of a wider project known as ArBolivia.

Manchester Credit Union celebrates 21st birthday

Emily Barker — Mon, 22 Oct 2012 09:21:46 +0000

Manchester Credit Union (MCU) has come of age, as they celebrated their 21st birthday, last Thursday 18 October at Manchester Town Hall.

The Credit Union, which is made up of several CUs from around the area, has grown from less than 100 members to over 10,000 over the last 21 years.

Christine Moore became the first paid member of staff in 2000 and is the acting CEO of the Credit Union. She said that celebrating their 21st birthday felt “fantastic”.

She added: “We’ve come such a long way and we are an amalgamation of lots of different CUs, that have all joined together to form MCU, it feels brilliant.”

We’ve got a whole range of people; we’ve got partners, there’s ex volunteers, people who’ve been involved in all the CUs over the years, we’ve got a real mixture – it’s fantastic, I can’t believe it.”

Tim Presswood, the Chair of the CU, became the Treasurer in 1996.

He explained that the birthday was: “a thank you” to all the members, partners and staff who have helped over the years, “not least of which is Manchester Council,” he added.

Tim was encouraged to join, what was formally Beswick and Openshaw Credit Union, by Nora Davies, referred to as a legend of the CU on the MCU website.

He explained: “A little old lady twisted my arm, her exact line was ‘Tim you’ve got a degree, you can be treasurer’, the fact is that my degree is in French, so really no use whatsoever. That was the origin of CUs, we were local people and if you had the potential to do basic book keeping, you did.”

Nora was honoured at the ceremony by receiving one of four pioneer awards for outstanding work with MCU.

Other award winners were Rose Askew, June Smith, and Rob Galvin.

Sir Richard Leese, leader of the Council, also attended the celebrations.

MCU celebrated their 21st on International Credit Union Day 2012.

Photograph courtesy of Andreas Andrews.

Credit Unions prepare to celebrate 'International Credit Union Day'

Emily Barker — Wed, 17 Oct 2012 11:05:09 +0000

Credit Unions across the world will be celebrating International Credit Union Day tomorrow (18 October).

Every year, on the third Thursday of October since 1948, credit unions have celebrated their unique way of banking and this year they are celebrating their members, with the theme: ‘Members Matter Most.’

"In the face of all challenges, credit unions have always existed to serve their members," said Brian Branch, World Council of Credit Unions president and CEO. "The clear and simple message, ‘Members Matter Most,' summarises credit unions' reason for being."

This International Credit Union Day is particularly important as it is taking place during the United Nations' International Year of Cooperatives.

The Credit Union National Association has even provided Official 2012 ICU products from Skittles to a piggy bank.

The day will be marked in 100 countries where 155,000 credit unions serve 196 million people.

Over in the UK a conference is being held at London Westminster today with speeches from Damian Hind MP, Chair of All Party Parliamentary Group on Credit Unions and Simon Hughes MP, Vice Chair APPG on Credit Unions.

Brian Branch continued: "We believe every day is credit union day, because at any time of the day or night, a credit union somewhere in the world is helping its members.

"We can take pride in how far credit unions have reached in serving members. But we cannot ignore the fact that we must continue extending that reach to provide more services to more consumers, including those who need our services most.

"In the end, it is the people, not profits that drive our actions. Members matter most, that is the philosophy that we live and breathe, each and every day of the year."

This year's theme was submitted by Sinéad Butler from the marketing services department of the Irish League of Credit Unions (ILCU). ‘Members Matter Most’ was one of more than a dozen themes submitted by representatives from Abacus Australian Mutuals, Credit Union Central of Canada, Credit Union National Association (USA) and World Council.

Are you a member of a Credit Union?

Tell us what you will be doing to celebrate International Credit Union Day by tweeting us @coopnews or writing in the comments below.

ACCOOP launched in Spain to promote accounting research from a co-operative perspective

Anca — Thu, 11 Oct 2012 08:40:02 +0000

The International Research Network on Accounting for Co-operatives and Mutual Entities (ACCOOP) was launched in Spain on 6 October to promote accounting research from a co-operative perspective.

ACCOOP was launched to enable accounting experts to share experiences and ideas, get in contact with fellow accountants who work within the co-operative sector and make new partnerships. It also helps is to promote a better understanding of co-operatives and mutuals among policy makers, in order to improve the legal framework and development of co-ops and mutuals.

ACCOOP aims to contribute to Accounting Standards Setters, following the agenda of the National and International Standards Setters and participating in any project that could impact on co-ops and mutuals.

This initiative is the result of the collaboration between The Centre for Research in Business Management (Centro de investigación en gestión de empresas) of the Polytechnic University of Valencia and the Co-operatives Accounting Commission (Asociación Española de Contabilidad y Administración de Empresas (AECA).

“ACCOOP seeks to promote the interest of academics in accounting for Co-operatives and Mutual Entities, enhance international collaboration in research activities and to serve as a meeting point between academics and accounting professionals of any type of organization concerned in accounting for Co-operatives and Mutual Entities,” said Fernando Polo-Garrido, Director of ACCOOP, CEGA.

He added: “ACCOOP has a broad approach and all thematic areas in accounting applied to Cooperatives and Mutual Entities are of interest, as well as a broad methodological scope.”

Anyone wishing to finding out more can subscribe to ACCOOP’s newsletter.

Find out more about ACCOOP at: http://www.accoop.org

If you are interested in these activities, you can fill in the form in the joining ACCOOP section.

Imagine 2012: All co-operatives can make one small change

AnthonyMurray — Mon, 08 Oct 2012 17:43:41 +0000

Co-operatives can do one simple thing to change the economic system, according to a speaker at the Imagine conference.

The economic event taking place in Quebec City heard from Dr Ronald Colman, who told delegates on Sunday that co-operative leaders can take this one piece of advice away from the conference and act immediately.

Dr Colman said co-operatives are in a new paradigm; and the movement can help enact change globally: "Co-ops are one of those rare institutions that is planting the seeds of the new economy. Co-ops are potentially one of our best hopes, if change does not happen in the co-op movement then where else are we likely to find it?"

During his presentation on 'What is progress and how can we manage it', Dr Colman believes co-operatives can start a new form of financial reporting. "An accounting system that begins with social, economic and environmental impacts," according to the founder and executive director of GPI Atlantic, a non-profit research group dedicated to developing comprehensive accounts and measures of wellbeing and sustainable development.

GPI Atlantic has constructed a full Genuine Progress Index for Nova Scotia, Canada (www.gpiatlantic.org); and Dr Colman appealed for co-operators to use this system for their needs.

He said: "Everyone has a set of annual financial reports, and they all follow an accounting system that is no different to the very accounting system that got us into the mess we're in today. So, if we can take this one little thing we can begin to make a change.

"If co-ops worldwide can begin to structure their financial reports to take into account environmental, social and economical costs, then that can bring change."

Dr Colman, who is currently working on bringing these measures of natural, human and social capital into Bhutan’s National Accounts, argued that Gross Domestic Product (GDP) just reported the money spent; and did not take into account the "invisible" human, social and ecological costs made through consumer decision.

He cited examples such as the transportation of butter from New Zealand to Chile reported no real costs since "greenhouse gas emissions are invisible". Such actions also send inaccurate signals to policy makers, as well as the public, said Dr Colman.

He added: "We currently measure how well-off we are as a society by how fast the economy is growing. The growing economy is being called robust and healthy, but this sends misleading signals to policy makers.

"The more trees we cut down and the more we deplete our fish stocks, the more our economy will grow. The more fossils we burn, the better our economy. It makes no distinction between activities that create benefit and those that cause harm, such as crime, sickness, pollution, war, cigarette sales, junk food, natural disasters."

Dr Colman believes co-operatives can do better: "This is not an appropriate accounting system for co-operatives. There is a reason co-ops are grown as such and we do our own members a disservice through the adoption of a standard accounting system.

"We need a set of accounts that include human capital, health, education. If we make an investment in cleaning up a polluted river, we should report that.

"In our accounts, there are measures of value, as well as measures of progress. We measure reductions in poverty, reductions in equity, reductions in crime as gains."

Dr Colman said co-operatives need to adopt three basic principles when constructing financial reports:

• Internalise externalities, explained Dr Colman: "So if you give your workers time off to do volunteer look at the work, if you see recycled paper you use that as a benefit. All of these things are measurable. If you stop serving water in plastic bottles and use jugs, you should include that. Look at the social, human and environmental externalities."

• "Recognise the economic values of non-market service," said Dr Colman. "So volunteer work and unpaid work inside the household should be reported, even though it's not part of the flow of money." He cited a study in Denmark that showed the Dutch unemployment rate was reduced by making part-time work more attractive and creating equal benefits compared to full-time workers. Added Dr Colman: "More jobs were created, and the Dutch have one of the highest rates of productivity."

• The third basic principle is to shift from fixed to variable costs. Dr Colman explained that while annual insurance may be paid for a car, the emission of the vehicle and number of miles driven needs to be reported. If an organisation offers free parking, it should instead charge for parking and offer incentives for car pooling.

Dr Colman encouraged delegates to look at case studies and other examples through his website (www.gpiatlantic.org); and told co-operators around the world to connect with the team behind GPI. He said that if there is any one institution to make this change and create hope, then co-operatives are best placed to carry this out. He closed by saying: "You could be a powerful force in this new paradigm."

Imagine 2012: The Press Conference

AnthonyMurray — Sat, 06 Oct 2012 22:50:12 +0000

A week of co-operative conferences and meetings in Quebec has been launched at a press conference this evening.

Imagine 2012, the international conference on co-operative economics, is the pre-event to the 2012 International Summit of Cooperatives, which launches on Monday evening.

Dame Pauline Green, President of the International Co-operative Alliance, opened the event’s press conference at the Convention Centre, Quebec City.

Dame Pauline said: “This is the beginning of a very exciting week. I am delighted to be taking part in the opening of Imagine. In this International Year there has never been a greater need for an emphasis on the co-operative model. It’s critical we get this message out. It's a moment of great opportunity for this movement of ours.

“This is going to be a great week, we are going to make a difference this week. We need to get the big message out, we're about the real economy when the big banks and others have failed them.”

Organised by St Mary's University, which runs the Master of Management Co-operatives and Credit Unions program, the two-day conference has an agenda of academic papers and discussion.

Imagine Manager and St Mary's Program Manager Tom Webb said: “Co-ops are uniquely placed to meet human need. We are here to look at the economy from a co-operative perspective. “Over next couple of days that's what we are going to do. I Hope it'll be thought provoking and hopefully people will have a lot of questions as well as answers at the end.”

The institution's President Colin Dodds said at the press conference that he wants delegates to share ideas and discuss best practice. He added that delegates should think that “we don't just live in an interesting, but dangerous world. In that sense co-ops have a lot to offer.”

New regulations for 3,800 credit co-operatives across Spain

Anca — Thu, 04 Oct 2012 14:54:50 +0000

More than 3,800 co-operatives from Spain will be affected by new regulations in the credit union sector.

From the 1 October, the National Directorate for Co-operatives will cease to exist. Instead, the Superintendence of Popular and Solidarity Economy will be responsible for regulating credit co-ops.

Doris Soliz, minister of Social and Economic Inclusion announced that the Superintendence would be responsible for registering credit unions and credit co-ops, acting as the main financial regulator for the sector.

Cecilia Vaca, the technical secretary of the Ministry for Social Development, added that these changes in regulation are part of a more complex process of consolidating the structure of credit unions and co-operatives.

The exact number of organisations that will need to register, and associates that will be part of the system, is still unknown, but it is estimated that nearly 4,000 co-ops will register. In order to simplify the registration process for co-ops, the Superintendence is launching a website that will enable co-ops to register online. The online platform has also been introduced with the aim of cutting costs.

The transition will last throughout the whole month of October during which the Superintendence will be receiving assets, liabilities and stats on credit co-operatives from the National Directorate for Co-operatives and the National Co-operative Council.

Jeannette Sánchez, minister of the Political Economy said these changes complete a three-year process of reform, which began with the Organic Law of Public and Solidarity Economy. It continued with the institutionalisation of the organisations that make up the financial sector of the public economy and the registration of financial institutions.

Freddy Perez, national president of Cooperativas said that with the new regulations the overall number of credit co-operatives and their assets would be known, avoiding any possible fraud.

According to Geovanny Cardaso, technical secretary of the National Programme of Popular Finances (Programa Nacional de Finanzas populares), credit co-operatives have assets of $2,685 million and count on more than 5 million members.

Imagine 2012 and the Opening of the International Summit: Monday Preview

Emily Barker — Thu, 04 Oct 2012 10:52:15 +0000

Imagine 2012 is the international conference on co-operative economics – it finishes on Monday and will be followed by the opening ceremony of the International Summit of Cooperatives in the evening.

Highlights of Monday’s Imagine conference include talks on the role of co-ops in the new economy, and the directions that co-ops need to take.

The day will kick off for the early risers with a speech on ‘How is worker ownership related to the health of communities?’ by David Erdal, the author of ‘Beyond the Corporation: Humanity Working’ at 8.30am.

Following this Vera Negri Zamagni, Professor in International economics at University of Bologna and co-author of ‘Co-operative Enterprise: facing the challenge of globalisation’ will discuss ‘Is bigger better? New opportunities for co-operatives’ at 9.15am.

This will have commentary by Samira Rajan, CEO Brooklyn Co-operative Credit Union, USA.

Claudia Sanchez-Bajo and Bruno Roelants, authors of ‘Capital and the Debt Trap: learning from co-operatives in the global crisis’ will be asking ‘Is the Debt Trap avoidable?’ at 11.15am.

In a speech at the Mainstreaming Co-operation conference at Manchester, UK, July Claudia Sanchez explained that co-operatives are less likely to fail in a crisis, because they have increased ownership and are able to plan and distribute their wealth over the long term.

At 2pm there will be a tribute to the Ideas and Work of Dr. Elinor Ostrom, who was awarded the 2009 Nobel Prixe in Economics for her analysis of economic governance. She is the only woman to have won the prize in this category.

This will be run by Dr. Barbara Alle and be followed by a film about Dr. Elinor Ostrom.

The final speech of the conference ‘Co-operative economics? Key directions from the new economics and implications for co-operatives’ by Professor of economics at Saint Mary’s University, Sonja Novkovic, will bring the conference to a close.

The opening ceremony of the International Summit of Cooperatives starts at 5.30pm.

The opening addresses be performed by: Monique F. Leroux, President and CEO, Desjardins Group, Dame Pauline Green, President, International Co-operative Alliance (ICA), Dr. J. Colin Dodds, President and Vice Chancellor, Saint Mary’s University and Pauline Marois, Prime Minister of Québec, Canada.

The opening speech on ‘the Amazing Power of Co-operatives’ will be done by Riccardo Petrella, Economist, politic scientist and alter-globalist at 6.30pm.