Co-op Bank’s ethics are “enshrined” in its new constitution, but it’s now 70% in private ownership of which 20% are “vulture funds” Silver Point and Aurelius, which is one of the funds threatening Argentina with debt default for a 1,400% profit.
Despite maintaining its "good with money" policy, the Co-operative Bank is now only 30% owned by the Co-operative Movement. One of its bondholders is hedge fund Aurelius Capital run by Mark Brodsky, formerly of Paul Singer's Elliott Capital Management (pictured). Both Aurelius and Elliott subsidiary NML bought Argentine debt on the cheap after Argentina's 2002 default. Argentina's economy has now recovered partly thanks to its creditors agreeing reduced debt repayments, but the vulture funds are seeking to enforce the debt in full in order to make huge profits at the expense of all the other creditors.
NML Capital famously seized the ARA Libertad, a 3-masted frigate used for training by the Argentine Navy, when it was docked in Ghana's Tema harbour. NML gained an injunction in October 2012 for the vessel, one of the largest tall ships in the world, to be impounded in lieu of its $370m claim. The UN ruled that as a military vessel the ship had immunity and she was released in December. Ghana's Harbour authority sued NML for over $7m. Elliott Capital is based in the British tax haven of The Cayman Islands.
Campaigners and account holders of the Co-op Bank, including Action Aid, Animal Aid, Burma Campaign, Ethical Consumer, Friends of the Earth, Greenpeace, Oxfam, People & Planet, Pesticide Action Network, ShareAction, Sustain, Up the Ethics, War On Want and World Development Movement (and GreenNet) are petitioning the bank to return to mutual ownership.
A parallel campaign run by the FairShares Association is calling on the Government to exercise its powers under Section 76 of the Companies Act to force the bank to change its name if it does not return control to the Co‑operative Movement within a fixed timeframe. The UK Financial Conduct Authority (FCA) can use its consumer protection powers to protect customers from being misled by the use of the word “co-operative” in the bank’s name.
Others are proposing account holders should abandon the bank in favour of the Nationwide, other building societies or credit unions. Triodos bank doesn't currently provide current accounts but it is rumoured it may do so before long. Should you stay or should you go? Check out Move Your Money's switch campaign to investigate the alternatives.