Britannia and Levene hit out at regulator’s claims

Andrew Bailey came under fire from two directions yesterday. Picture: Getty

The criticism, in written evidence to committee chairman Andrew Tyrie, will be embarrassing for Andrew Bailey, head of the Prudential Regulation Authority, who gave evidence to MPs on 11 February.

Bailey said Britannia would have failed without the takeover by Co-op Bank, a merger subsequently blamed for many of the Co-op’s financial problems.

But the Britannia board, including former chief executive Neville Richardson, say in a letter made public by Tyrie’s committee yesterday: “There is no compelling evidence that Britannia would not have survived as an independent firm or that it was the root cause of the Co-op Bank’s problems.

“Co-op Bank, which had a weaker capital position than Britannia on merger, would have faced very significant challenges as a stand-alone firm.”

The building society’s board cited examples, including Co-op Bank suffering PPI redress costs of £300m since the merger in 2009 while Britannia did not sell PPI.

In a separate letter to Tyrie, Lord Levene, chairman of NBNK Investments, which mounted a failed bid for the 600-plus Lloyds Project Verde branches, criticised Bailey for asserting the fledgling NBNK did not meet the test of a challenger bank set by the Vickers Commission.

Levene said Vickers’ recommendation that a new challenger bank should have a 6 per cent share of retail banking was “not an absolute requirement but a goal”.

He also denied “categorically” Bailey’s inference to MPs that the NBNK chairman’s two meetings with the Governor of the Bank of England in summer 2012 on the Verde bid were related to the issue of market share.

Levene said they were rather about the Verde decision being “political”, and to suggest otherwise was “totally misinformed”.