A FORMER chief executive of the stricken Co-operative Bank has told MPs he was concerned about its ill-starred plan to buy more than 630 branches as early as 2011.
Barry Tootell said he was unsure whether the Project Verde takeover was in the Co-op’s best interests after he stepped up from being the bank’s chief financial officer to succeed Neville Richardson in July of that year.
His appearance before the Treasury select committee came against the backcloth of the £750 million acquisition being scrapped last April as concerns mounted about the mutual’s capital position.
Tootell, who quit his job a month later following a shock credit downgrade by ratings agency Moody’s, said: “Let me make it clear, I did not want to pull the plug in 2011 but I was concerned that it was the right transaction for us… not concerned whether we could do it.
“Things became clearer in 2012, when we knew more about the economics of the business we were buying and our ability to integrate it.”
It came as Treasury committee chairman Andrew Tyrie grilled Tootell about the bank’s claims that it had a strong capital position at the end of 2012 when regulators were discussing its need for more capital.
Tyrie said this juxtaposition “sits oddly to say your balance sheet remained strong” ahead of a £1.5 billion hole being found in its capital cushions.
“You were sailing close to the wind,” Tyrie said. He told Tootell the committee found much of his evidence on the Project Verde deal and the ill-fated acquisition of Britannia building society in 2009 “disappointing”.
Tootell said the Co-op Bank had not been “glib”. He said the bank had a core tier one capital ratio of 9.2 per cent, and the core underlying business remained profitable.
Tootell also refused to blame auditors KPMG for the due diligence it did on Britannia, acquired after the collapse of Northern Rock in 2007 and HBOS in 2008. “I don’t believe management abdicate responsibility for engaging advisers,” he added.