Co-operators are set to take action against the Co-operative Bank if it continues to take the ‘co-operative’ name while only holding a minority stake in the business.
If the Co-operative Group’s ownership of the Bank is reduced to 30 per cent, then the business ceases to be a mutual, according to the definition of a co-operative from the International Co-operative Alliance, which describes it as a “jointly-owned and democratically controlled enterprise”.
Co-operative lawyer Ian Snaith said it is a “shocking idea” that the ‘co-operative’ name could be used in this way and, in an article published by the News, said it is “legally questionable as well as being unethical”.
He added: “The new owners are welcome to choose a new name that expresses their ethical intentions and brand. There is no problem about making the bank sound “cuddly”. They can have an “ethical” board to try to keep the brand’s image. They can amend the Articles of Association. They must not say that it’s a co-operative when it isn’t. That is disreputable.”
In an article for the News, Ed Mayo, Secretary General of Co-operatives UK, said: “The assumption is that the Co-operative Bank will now be an investor-owned business, subject to stock market equity pricing – in short that it will not be a co-operative, or owned in line with core co-operative principles
“Whether this is the case must depend on a reading of the full prospectus and formal constitution of the new Bank – and whether these are accepted by all the relevant parties. We have already indicated that if we believe that it is not a co-operative, then we would argue vigorously for a review of the name.”
He added: “There are some indications that co-operative values may be locked into the core purpose of the Bank. If so, then the Co-operative Group deserves credit for a creative model that will be new to the UK. This is what in other countries is called a Public Benefit Corporation – profit-seeking, but with a wider public purpose enshrined in its goals.”