Labour Party to sever links with Co-op Bank after 100 years

Apr 24, 2014

Party says decision to part company with troubled Co-operative Bank is a purely commercial decision

Christopher Furlong/Getty Images

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.

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What about the 50 labour MPs who receive substantial donations from the co-op.

OK, so what do the Labour party know that us plebs don't? The average punter has his investments protected by government guarantee, but businesses and charities don't...leads me to suspect that there is knowledge in the ranks of power that the Co-Op may go down the tubes and the Labour party is getting its funds out sharpish before it looses any money in any future collapse....Its in Cameron's interest to maintain the Labour party as it is, being unelectable as long as Miliband rules the roost. One thing is for sure, the Yanks who own the Co-Op bank will not be interested in bailing it out with their money, and any bail-out at this stage by the UK Govt would be seen as weakness and good money after bad

From the bank or Co-Op movement?