Every now and then someone pops up to explain that what this country needs is a People’s Bank. One not run by typical bankers, but by those with the customers’ interests at heart. One of Labour’s policies is the creation, presumably by requiring existing banks to sell properties, of two so-called “challenger banks”.
We now have a pretty clear idea of what a People’s Bank might look like. The official report into the collapse of the Co-Op Bank has been published. It paints a horrifying picture of a bank that was indeed run by people other than bankers, who were supposed to be acting out of altruism and in their customers’ interests.
They seem to have known rather less about banking than I do – and possibly you do, as well. Discussions over whether the bank had enough money to survive appear to have taken second place to those on ethical issues. The former chairman of the bank, the disgraced Paul Flowers, seems to have been popular mainly because he ran meetings well. He knew virtually nothing about the bank and could not even get close to an accurate estimate of its size, as his appearance before Parliament made clear.
The acquisition that sent the bank under, of the Britannia Building Society, was not subject to the sort of checks as to its financial health that would have applied if the purchase had been by a quoted company. The auditors were not given proper access to its books. Had this happened with a quoted bank, it is almost inconceivable that the deal would have gone ahead.
I have no huge time for the banking sector, as other blogs will have made clear. But the rank amateurs at the Co-Op are hardly a good role model for a People’s Bank.
Incidentally, I notice one of Ed Miliband’s first speeches on banking, after he became Labour leader, talked about banks’ responsibility to serve the real economy and to build a long-term, trusted relationship with customers. It was delivered in 2012 – at the London HQ of the Co-Op Bank.