For a typical company, the release of an annual report showing losses of £1.3bn would spark the fear of annihilation in anyone involved with the organisation.
But for the Co-operative Bank, this is its story being laid to rest. It does not get any worse than the humiliation of the past 12 months that has, in effect, seen the largest ever demutualisation of a co-operative-owned asset in British history.
To top off the failure of chasing growth through the acquisition of a significant chunk of the state-owned Lloyds Bank, its past merger with Britannia building society led to a massive write down in corporate loans.
It would be usual for questions to be asked on publication of such a damning annual report, but all the dirty laundry that could have come out of the Bank has already been savagely shred in the media and Parliament, from tales of drugs allegations to governance failures.
The fall-out is still being felt across the co-operative sector and those deeply connected with the Bank’s ethics. But a full collapse of the Bank would have been much worse, with the potential to put the whole of the Co-operative Group into the hands of its banks and the reliance on a tax-payer bailout. It is a remarkable story that the nuclear threats have been avoided.
Now, the Bank has very little to do with the Group. It still shares some services and functions and connects at a managerial level across the two businesses, but the Bank has been left to its own path. Last month, the Group removed its only representative on the Bank board, general counsel Alistair Asher, due to a conflict of interest over the need for £400m in additional capital. For the Group, there is a risk that it will not take part in the requirement for the additional £400m, which is £120m if it is to keep its 30% stake in the Bank.
The Bank’s report mainly focuses on risk aversion for the future, alongside the creation of massive internal structures of committees to keep on top of every single part of the organisation that could go wrong in the future.
It will not turn a profit for at least two years, and now that its reputation has been muddied, the focus is on cleansing the organisation. Reports over the next few months from the Sir Christopher Kelly review and Treasury select committee will add to this noise.
Already, a five year plan is aiming to turn the Bank into an ethically-focused plc – a process which, it admits, conflicts with its obligation to appease profit-seeking shareholders. There is also the hope from the Save Our Bank campaign that the organisation can be brought into mutual ownership one day.
The plan now, though, is to look forward, decrease the entries on its risk registers and to ensure its reputation doesn’t diminish any further.