Ex Co-Op Bank Boss Refuses Blame For Losses
The former boss of the Co-operative Bank and Britannia Building Society has told MPs he foresaw the "disastrous" failure of Co-Op to buy Lloyds branches.
Speaking to the Treasury Select Committee, Neville Richardson's evidence highlighted the financial problems behind the Co-op's failed plan to buy 632 Lloyds branches, known as Project Verde.
Mr Richardson said: "I have to say quite unequivocally that if I had known that Verde was going to be as all-consuming as it became I would not have been for it all.
"Because the disastrous consequences I warned of with the other programmes and Verde coming down the line were just being multiplied by Verde and the distraction Verde was creating."
The Co-operative bank announced a £709m pre-tax loss in the first half of the year and the group said there will be "no quick fixes" as it embarks on a four-year turnaround plan.
The group hopes to partly fill a £1.5bn hole in its cash reserves by raising £500m from its own bondholders.
Mark Taber, who runs the Co-operative Action Group, an organisation made up of bondholders who are contesting the restructuring plans which could see them lose up to 60% of their investment told Sky's Jeff Randall: "The Co-op promised 12 weeks ago that they were conscious of the different interests and would look at alternative proposals and also pay for financial advice for them.
"We were promised they'd speak to us when these results come out, now they're saying they won't. It seems as if the Co-op group is trying to railroad people into a proposal. It's a very dangerous strategy."
Andrew Tyrie MP, who chairs the select committee, said: "There appears to be a yawning gulf between the evidence the Committee heard ... from Mr Richardson and the evidence we heard previously from Mr (Andrew) Bailey. The committee will be investigating this a good deal further."
In a rare broadcast interview with Sky's Jeff Randall, the chief executive of Lloyds banking group, Antonio Horta-Osorio, defended his company's due diligence procedure over the proposed sale.
He said: "We checked their finances and (those of) everybody in the market. If you look at the Co-operative group bonds which reflect the risk of the Co-operative group, until February of this year the risk was considered by the market to be as good as the average of the UK banks."
Lloyds, which is being forced to dispose of the branches as a condition of its bailout, confirmed in July that the branches would be re-branded as TSB Bank.
It is seeking an extension from the European Commission to dispose of them via an initial public offering.