Bottom Line: Group is right to hang onto its best assets

 
Elizabeth Fournier

THE COMPARISON that Niall Booker drew yesterday with the banking behemoths of the crisis years was stark – just like Lloyds and RBS, the Co-op’s banking arm has got itself into a mess, and it’s going to take years to get out.

So with many months of pain ahead of them, it’s not difficult to see why bondholders want to share the burden. Yet despite interested parties reportedly lining up to walk off with one of the group’s trophy businesses, executives seem keen to keep the restructuring focused in the financial arm – including the sales of its fund management and insurance arms that are already underway.

They’re right to stick to their guns. Yesterday’s figures showed that the group’s trading arm – which includes food, pharmacy, travel and the in-demand funeralcare business – turned a profit of £150m and were only held back by the disastrous banking writedowns. This is a group that knows how to protect its core brands, even if parts of it have strayed from its famously ethical path.

With 2.5m members spread across the country, the Co-op Group is never going to please everyone. By limiting damage to the bank unit it’s ringfencing its other businesses from being tarnished with the same brush.