Ex-cop Bob Dench halts Co-op Bank’s decline

Bob Dench is almost certainly the only senior bank manager to have crawled along a drain to apprehend a criminal. At the time, Dench, now chairman of the Co-op Bank, was a junior policeman. But even then he showed a determination that has seen him through tough times in the financial services industry.

The thief was incapacitated by the noxious gas mixture in the pipe and Dench was forced to drag him to safety.

In recognition of this feat, the 22-year-old copper was awarded the British Empire Medal for gallantry in 1972, an honour bestowed upon him by the late Queen.

Dench says: “Her Majesty asked if my police dog survived the situation and I told her yes.”

The investiture was filmed for a BBC programme that made the cover of Radio Times. There are no medals in the banking industry, or you might say that Dench, 74, deserves gongs for her role in turning around the fortunes of two deeply troubled lenders.

Thanks to his efforts, the once-threatened Co-op Bank will be returned to its traditional co-operative status through its takeover by Coventry Building Society.

Dench honed his rescue skills at Paragon Bank, a specialist financial services provider. As chairman from 2006 to 2018, Dench, an experienced sailor, steered the organisation through the devastating impact on profitability of the global financial crisis.

Dench says he took on the notoriously difficult role of CEO in 2004, at the age of 54. He says: “I was getting bored because I had retired 12 months earlier after 27 years at Barclays. I was on the board of the bank but I knew I wasn’t going to be CEO, so I decided to call it a day.”

Dench sees resilience, not determination, as his main attribute, but his career suggests otherwise. At Paragon, he was unimpressed by his fellow directors’ lack of faith in the bank’s future.

He comments: “They were weak administration, so I fired them.”

It’s clear that Dench prefers bold and outspoken colleagues. “I usually choose people on board who can tell me when I’m being an idiot.”

He pays tribute to the people who helped him along the way, including colleagues at Barclays, Co-op Bank and other companies, as well as a primary school teacher who clearly saw the potential for great things in him. His wife of 52 years is of course at the top of the list.

When Dench joined Co-op Bank in 2018, the bank was in existential crisis, largely caused by its ill-fated purchase of Britannia Building Society in 2009, which left it with a deficit of £1.5bn.

Added to this misery was the incompetence and venality of the bank’s then-president, Paul Flowers. The Methodist pastor combined a penchant for cocaine, methamphetamine, and sex workers with a lack of numeracy. Flowers didn’t even know how big the bank was.

The alarming facts were revealed in a Mail on Sunday report in 2013, leading to Flowers being dubbed the “Crystal Methodist.” The revelations caused great shock and disappointment among the public. As part of an honest co-operative group, Co-op Bank has always stressed its ethical stance.

The bank’s condition was so dire that U.S. hedge funds that had invested in the bonds were forced to take ownership in 2017. That deal separated the business from the Co-operative Group, severing its links with the mutual. For many account holders, that status was a key attraction for a bank founded in 1872 to embody community-oriented principles.

Unlike some top bosses, Dench makes no attempt to suggest that the bank’s turnaround and return to profit in 2021 was entirely his own achievement. He pays tribute to his directors, such as CEO Nick Slape and CFO Louise Britnell.

He also acknowledges the key role of hedge funds, which are usually seen as villains in this case. But Dench only saw the best side of Co-op Bank’s hedge fund investors: Anchorage, Bain Capital, Cyrus, Golden Tree, JC Flower and Silver Point Capital.

He says: “Hedge funds have a worse reputation than they deserve.”

It also taught him a lesson about what matters to people. The bank has 2.6 million customers, about 90,000 business account holders and 50 branches. He comments: “I thought customers would be busy with Flowers. But they were focused on what would happen to their branch.”

The tie-up suggests that Coventry, the UK’s third-largest mutual lender, should consider keeping the Co-op Bank logo on its branches.

The hilarious way Dench recounts the events of her career – I could almost smell the foul gases in the sewage pipe – makes me wonder what might have happened had she stayed in her first job as a young reporter at the Daily Mail.

A GP in the deprived New Addington area, near Croydon, suggested that the 16-year-old school leaver could make a success of journalism. Dench says: “I couldn’t survive on the money I made in journalism, so I joined the police, where the pay was a bit better.”

The rescue operation was not the only colorful episode from his police service in 1969–1976.

He also closed the prison, he explains. “In the early 1970s, the IRA financed its activities through bank card fraud, stolen from the hallways of flats.”

“One of the gang members became a police informer, but when he was released from prison he fled to Scotland, where he was imprisoned for another crime. The conditions in the prison were medieval and I used that as an excuse to get him released. It led to the prison being closed, which didn’t make me very popular, but people had been trying to close that place down for decades.”

The lessons he learned in policing about reducing card fraud led to a stint at Barclaycard. Between 1976 and 1984, he introduced credit and behavioural scoring and founded the UK’s first large-scale telephone lending company.

His subsequent roles included CEO of Barclays Australia and five years in New York as head of Barclays Global Visa Travellers Cheque. Dench was chairman of the bank’s retail division during the takeover of Woolwich Building Society, which transformed Barclays into a mortgage powerhouse.

Dench is staying at the Co-op for a temporary period, but is also a director of the Charities Aid Foundation, the fourth-largest charity in the UK. He also plans to devote some time to sailing. As I left the interview, I wondered how he could share his wisdom on how to get out of tough situations, literally or otherwise.

An Instagram or YouTube video series will be mandatory in the banking industry – or any other industry.