“Both organisation had problems. Bringing them together exacerbated those problems. It might have worked if the merged organisation had received first class leadership. Sadly it did not.
The banking group board failed in its oversight of the executive. The group board failed in its duty as a shareholder to provide effective stewardship of an important member assets. Collectively they badly let down the group’s members.”
Lousy governance and poor leadership are at the heart of many a corporate failure, as the Co-op so ably demonstrates.
The Telegraph reports that the US, Japan, Germany, Britain, France, Italy and Canada have agreed to "intensify targeted sanctions to increase the costs of Russia's actions" unless the Kremlin takes immediate steps to defuse the crisis in Ukraine.
The G7 is for now holding back Iranian-style "stage 3" sanctions against the whole Russian banking system, mining industry, or the oil and gas nexus. This nuclear option will be deployed only if Russia escalates from black operations in Eastern Ukraine to an outright invasion, said Alastair Newton, head of political risk at Nomura.
However, behind the scenes the UST will already be pressuring banks and financial institutions to "review" their dealings with Russia. Indeed some institutions are so nervous about UST disapproval that they act before being approached, step forward JPMorgan.
IVG Immobilien and Evans Randall find themselves in a bit of a pickle as the Gherkin (jointly owned byu both of them) is in receivership.
IVG Immobilien filed for insolvency last year, and Evans Randall has been unable to agree a new deal with IVG.
The Labour Party has finally decided to give up on the Co-op Bank, and will move its enormous debt (granted by the Co-op at preferential rates) elsewhere.
This late action comes as the Co-op sinks further into the mire. Aside from the issues surrounding its losses, governance, Paul Flowers, and the resignation of Lord Myners it also recently came to light that Munir Malik one of its board has been suspended because he falsely claimed to be a chartered accountant.
Malik, who was part of the group's "values and principles board" was been suspended, and an investigation launched into his qualifications.
The ICAEW told economia that Malik had been previously struck off as a chartered accountant and shouldn't be using the qualification. He was appointed to the Co-op board in May 2013.
Those of you wondering where labour will be placing its debt need look no further than the Unitytrust bank.
The Co-op Bank debacle shows just how much corporate governance matters, or in the Co-op's case how much the lack of it matters.
The Telegraph reports that Sir Christopher Kelly, a former official at the Treasury, is to publish a report next week which is expected to say that the Co-op Bank failed last year due to a combination of woeful oversight and its disastrous merger with the Britannia Building Society.
Sir Christopher will say that only “cursory” checks were made before the 2009 takeover of the Britannia and that the Co-op's directors did not have “their eye on the ball”.
The proposals follow a review by Lord Myners, the former City minister who resigned from the board of the Co-op, who has looked at ways to improve how the Co-op as a whole is run.
Quite why the Co-op is some 10 years behind the basic tenets of the Higgs and Smith reports published in 2003 is beyond me.
Reforms introduced by the Financial Conduct Authority (FCA) will require borrowers to endure “invasive” inquiries into their spending and lifestyle, including their expenditure on weekly groceries, gym membership etc.
This is all very well and prudent. However, given that the bedrock of the UK economy is the ever increasing value of property and that the debt horse well and truly bolted many years ago, these reforms are somewhat late and counterproductive.
It seems that faulty electricity meters may have given rise to a situation where 16,000 customers of SSE have overpaid their energy bills.
Customers on 'Economy 10' tariffs may have paid too much because the meter clocks were set incorrectly.
SSE said a "manufacturing fault" with one batch of electricity meters could result in them incorrectly switching back an hour after a power cut in winter.
"For customers timing their electricity consumption in order to benefit from off-peak rates, this could mean that some of these units would be charged at the normal rate rather than the off-peak rate. SSE... estimates that a total of around 8,000 customers are likely to have been affected."
It also admitted a separate issue where meters had been "installed with the off-peak times set incorrectly for the customer’s supply distribution area". About 8,000 meters could also be affected by this problem.
The Office for National Statistics (ONS) reports that UK inflation rate as measured by the Consumer Prices Index (CPI) fell to 1.6% in March from 1.7% in February.
This is the third consecutive month inflation has been below the Bank of England's 2% target rate, and the lowest rate since October 2009.
The EU has decreed that, in order to ensure that statistics from EU countries are fully comparable, the UK's Office for National Statistics (ONS) will have to start to include illegal activities in GDP calculations as from September.
Initially the UK will only include UK production of cannabis, drug smuggling and prostitution. However, in due course illegal employment, gambling, pirating of software and fencing of stolen goods will also have to be included.
The Co-op Bank made a loss of £1.3BN last year (in line with expectations), and will remain loss making for the next two years.
The Co-op has begun talks on raising £400M to ensure that it doesn't breach its minimum capital requirement.
Niall Booker, chief executive of the Co-op Bank, apologised for the situation and said it would be clawing back about £5M in bonuses from former directors and executives due to the failings.
“We appreciate that customers and other stakeholders continue to feel angry about how past failings placed the future of the business so seriously at risk. I would like to apologise to them, to thank them for their continued loyalty and to thank colleagues for their commitment during such difficult times."
Yesterday Lord Myners, one of its directors who is currently conducting a review of the Co-op's governance, resigned. He will remain a director until the Co-op's annual meeting on 17 May, when he had been due for re-election. He is still expected to complete his review.
Wonga have fallen foul of the Advertising Standards Authority (ASA) which has banned a Wonga advert for implying that the representative APR of 5853% was "irrelevant".
ASA received 31 complaints that the ad confused viewers about the interest rate applied to a Wonga loan, implied that the representative APR was irrelevant to a short-term loan and was irresponsible because it encouraged consumers to disregard the representative APR and thereby trivialised the decision to take out a short-term loan.
This is all very well in theory. However, short term loans from comapnies such as Wonga are exactly that, short term. In the event that the debt is not repaid after a period of around 30 days these companies enact procedures to reclaim the outstanding amount.
"Whilst we acknowledged that viewers taking out and repaying the loan within the stated time period would not repay 5853pc of the loan, we were nevertheless concerned that viewers would be left without a clear understanding of how the information in the on-screen text could be applied to a Wonga loan, given the ad's assertion that the representative APR was not indicative of the cost of the loan.
We considered that, though it attempted to clarify the costs associated with a Wonga loan, the ad created confusion as to the rates that would apply. On that basis, we concluded that the ad was misleading."
The Office for National Statistics (ONS), for the first time in 15 years, is to change the way that it measures the economy.
The new accounting standards will take effect from September. The ONS will look at research and development spending to calculate its estimate of gross domestic product, rather than treating it as a cost of production. The construction of aircraft carriers and other weapons will also add to GDP.
The ONS, in a bizarre move, will also count future pension rights as if they were present income.This is predicted to double the savings ration to around 10%.
Coincidentally George Osborne last week said that Britain needed to save more and that the measures announced in his “Budget for savers” were just a start.
Lafarge and Holcim have announced the terms of a merger that will create the world's largest cement maker with combined sales of €32bn.
The joint company is to be called LafargeHolcim, and will be based in Switzerland and listed in Zurich and Paris.
However, there are a catalogue of regulatory issues that will need to be addressed and as such the approval process could take up to two years (according to UBS analysts quoted by the Telegraph).
In the meantime expect further tectonic shifts in the concrete industry as other players look to consolidate their positions.
The ECB on Thursday proved once again that it is enthralled by the theoretical monetarist dogma championed by its German masters at the expense of a real life economic crisis endured by the Southern members of the eurozone.
Mario Draghi, ECB president, said the governing council had agreed unanimously to take emergency measures if inflation falls too low. He is quoted by the Telegraph:
However, interest rates have been left at 0.25% as inflation fell to 0.5%. This level is half that of the 1% “danger zone” highlighted by Draghi in the past.
The eurozone is now heading towards a protracted period of deflation which will destroy the economies of its Southern members, as they will be unable to service their debts.
America's attempt to use SWIFT (letting JPMorgan block a Russian payment for Sogaz, part-owned by sanctioned Bank Rossiya) as a means of pressurising Russia into backing down in the Crimea dispute has fizzled out, as America has blinked first.
Whilst this little financial skirmish, on the face of it, appears to have fizzled out there will be long term ramifications. Russia and other countries (eg China, those in the Middle East etc) will not accept having their economies threatened by US actions such as this, the Dollar will not remain the reserve currency of the world for much longer.
London has now the distinction of having property within its boundaries that, on average, is twice the value of the average property in the rest of the UK.
According to the Nationwide the difference in price between the average home in and outside London is now £183,000. The Telegraph reports that London prices were up 18% on the previous year.
Sadly the bubble is brought about by a disproportionate number of wealthy foreign property investors, and a limited supply outstripped by an excess demand from those who do not wish to endure the increasingly barbaric daily commute into London.