HSBC veteran drafted in to plug Co-op's black hole

The Co-operative group has hired a former HSBC big cheese, Niall Booker, to take over its banking arm and pull it back from the brink...

by Michael Northcott
Last Updated: 19 Aug 2013

Ratings agency-cum-doomsayer Moody’s has hinted that the Co-op could need a bailout to get it back on track. So where should the struggling bank turn? Surely none of the execs at Lloyds or RBS could help – neither bank has had much luck in reviving their fortunes since their taxpayer bailouts. Instead, the Co-op has opted for Niall Booker, the former head of HSBC’s North America division, to take over.

So what’s the problem, and why is Booker the man for the job? Well, Booker’s predecessor Barry Tootell resigned earlier this month after Moody’s (a ratings agency) downgraded the Co-op’s debt to ‘junk’ status. Then the bank had to ditch plans to acquire 632 high street branches that Lloyds is trying to offload, thanks to news that it has a capital shortfall of up to £1.5bn. The Co-op reckons that the Booker’s experience of dealing with regulators during his time at HSBC – and reviving the North American business – makes him a good fit. 

Euan Sutherland, the Co-op Group chief executive, said: ‘The Co-operative Bank has a strong future. We will build on our strengths as a member-owned bank, with a loyal customer base and an ethical heritage. Niall will add tremendous value.’ To turn the bank’s fortunes around, however, Booker is literally going to have to add £1.5bn of value, and that’s a pretty big ask.

It’s worth pointing out that Booker has actually been out of work since he left HSBC in 2011, and he has not had a UK-specific management role for some years. His tenure at his old bank did not end cleanly either: he left after little more than a year as CEO of HSBC North America because of a management shakeup.

Still, Booker himself sounds confident. He said that, whilst there are ‘no quick fixes’, ‘I will be focused on the actions to strengthen our balance sheet and satisfactorily resolve our underlying issues, while at the same time continuing to serve our existing customers and build on [the bank’s] exceptional brand strength.’ In the near term, the Booker hire should mean that rumours of the bank closing or being sold will be scotched. In the longer term though, filling that £1.5bn black hole will take more than a confident-sounding press release…

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