Labour Party to sever links with Co-op Bank after 100 years
Party says decision to part company with troubled Co-operative Bank is a purely commercial decision
THE Labour party is to end a 100-year association with the Co-operative Bank, moving a £1.2m loan and its current accounts to the trade-union owned Unity Trust Bank. The party says the decision has been taken for commercial reasons and is not related to the Co-op Group's ongoing troubles.
The BBC reports that "negotiations have begun" to end the historic link after a year of controversy for the bank, which confirmed earlier this week it made a loss of £1.3bn last year after the discovery of a £1.5bn 'black hole' in its balance sheet.
The bank has also been hit by damaging allegations of incompetence at the top and the resignation of its chairman Paul Flowers, who is now facing charges for possession of controlled substances.
Last year, The Guardian reported that Labour was trying to "distance itself" from Flowers after it emerged he attended a private dinner with Ed Miliband. The party was also urged to return a £50,000 donation linked to him.
Now the BBC quotes "senior sources" in Labour as saying the bank's troubles have "strained relations" between the two. It is also understood that the bank, which is now 70 per cent owned by American investors, wants to become "apolitical".
The Co-operative Movement, of which the bank is a surviving descendant, joined forces with the Labour Party in the 1920s and their financial relationship is believed to have started at that time.