Co-op Bank Review Sparks Pay Clawback Demand
The Co-operative Group is facing calls to claw back pay from the executives who presided over its tumble towards collapse as a review blames a "culture of mediocrity".
The independent review of the problems which led to a £1.5bn funding gap, carried out by Sir Christopher Kelly, was commissioned by the Bank before it fell into the control of US hedge funds.
It concluded the roots of its problems lay in its 2009 merger with the Britannia Building Society - burdened by property loans which turned sour at the height of the financial crisis.
Sir Christopher said the bank's demise reflected a "sorry story of failings" on many levels.
The review found "overwhelming" evidence that Britannia chief executive Neville Richardson, who took over as boss following the tie-up, failed to leave the new business "in a good position" when he left in 2011.
It also said the culture of the bank was such that there was a "willingness to accept poor performance".
Led at the time by Peter Marks, the board of the wider Co-operative Group was also criticised.
The findings were released as research by Sky News identified pay and bonuses among three key figures in the Co-operative movement worth more than £12m between 2008 and 2012.
Mr Marks topped the list with a total £8.1m, followed by Mr Richardson with £3.77m and disgraced former Bank chairman Reverend Paul Flowers, who received £750,000.
In an interview with Sky News John Mann MP, a member of the Treasury Select Committee and member of the co-operative movement, slammed rewards for failure and said the report showed shareholders deserved to get money back.
Commenting on the conclusions of his report, Sir Christopher told Sky News: "The executive of the bank proved incapable of dealing with some of the difficult issues it faced.
"The bank board, for whatever reason, was not affective in holding them to account and the Group board - because remember the group had a role in this as 100% owners of the bank at that point - failed to provide effective stewardship of one of their members' most important assets".
Responding to the findings, current bank chief executive Niall Booker said: "We broadly accept the findings of the report which we know will make difficult reading for our customers and will shock those new to the difficulties which the Bank, its employees and customers have faced.
"We do believe there are many more positive aspects of the Co-operative Bank's culture that are not reflected in the report, for example not enough credit is given to the service ethic and empathy of our employees.
"On behalf of the Bank I would like to apologise for these past failings".
He insisted the Bank had already made "good progress" in addressing the issues identified by the Kelly report.
On the issue of clawing back pay, the Bank's statement added: "The Board will consider the implications of today's report and, bearing in mind the various external investigations into the same past events which are still ongoing, consider what action it should take, after taking appropriate professional advice."