HOW did it come to this? The supposed poster child for another way of running banks, forced to turn on the assets of its own bondholders to help stanch the gaping £1.5bn capital hole in its business plan.
Co-op Bank was the government’s favoured candidate to buy 632 branches from Lloyds Banking Group. It was seen as the means to bring a big mutual challenger to the high street. That’s no surprise from an administration that has talked up the mutual model (as opposed to the PLC) as a new way forward for UK business.
But it is important that the government is made to feel suitably embarrassed for its glaring error. Perhaps it will end its fond belief that in such matters it knows best.
In recent days, we have also seen the chancellor George Osborne engineer the departure of the accomplished chief executive of RBS Stephen Hester. The bank’s share price promptly dropped eight per cent in early morning trading, a clear signal that the market took a dim view of Osborne’s brazenly political intervention. Now we have proof that the government’s intended challenger bank would have been better employed as a cautionary tale than schoolmaster to the established high street giants.
Politicians are expert at winning popularity contests. Business is a tougher school. They should stick to what they know.