Mutuals merging from strength

Tuesday, 29 November 2011

In 2009 the UK organisation The Co-operative Financial Services (CFS) merged with Britannia Building Society. This was the first merger possible under a new UK law (the Butterfill Act) of two distinct mutual organisations. During the recent ICMIF Conference Paul Flowers, Chair of the Co-operative Banking Group (CBG - the new name for the merged organisation) reflected on the merger and the longer process of integration of the two organisations and especially upon the cultural challenges which this brought about.

When relating the history of the merger he says “We merged from strength and we matched each other extraordinarily well”. The businesses had many synergies and where one was weaker the other was stronger which led to the creation of a business which now has 8 million customers, 11,000 colleagues, 350 UK branches and 1.5 million home and motor insurance customers. “We believe that the merger has transformed our business”, says Paul. “We try to put our customers at the heart of our business, by understanding them we believe that we can offer products and services that will not only meet their needs but, we hope, delight them. Our customer promise and our relationship model are embedded in everything that we do”.

The success of the merger was proved in 2010 when the Financial Times voted the Co-operative Bank the world’s most sustainable bank. Paul says, “We hope that we are becoming a truly compelling cooperative alternative as part of the cooperative and mutual family. We truly believe that the way we do business is based upon the values that we all share”.

Paul went on to say, however, “Whenever we talk about mergers we need to positively address the cultural issues and cultural assumptions and what is not said whenever we sign on the dotted line. We found that we have had to work very, very hard indeed to deal with cultural assumptions, with the differences which were there, which we had assumed were not”.

Paul also spoke about the current process within the Co-operative Group known as Project Unity. This project aims to ensure that all the different families of the business within The Co- operative Group as a whole, can and do, effectively relate to each other internally and present one external “face” to the outside world of a single “Co-operative”. As Paul says, “Internal silos with people maintaining little empires will not do and we are trying to tackle that, and the cultural attack is part of that”.

Paul is a leading figure in the cooperative movement; in addition to being Chair of CBG he is Deputy Chair of the Co-operative Group Board and also chairs various Board Committees within the movement, the most recent being his appointment as Chair of the new Global Co-operative Development Fund, sponsored by the International Co-operative Alliance (ICA) and as a new Board member of Allnations, ICMIF’s own capital support vehicle.

For the full presentation visit the Conference web site.