Addressing a House of Commons Treasury committee meeting today, the former chief executive of Britannia Building Society and The Co-operative Bank said the organisation was “in good shape” when he left in the middle of 2011.
He said he believed the acquisition of Britannia Building Society in 2009 by the Co-op had no effect on the banking group’s £1.5bn capital shortfall.
Facing often fierce questioning from MPs, Mr Richardson said less than £300m of the Co-op’s shortfall was due to bad loans from the Britannia portfolio. He added that the Financial Services Authority would not have let the merger go through unless both organisations had sufficient enough capital adequacy.
He said: “The two were good strong organisations, and Britannia was the best mutual in Britain at the time. It is very sad what has happenned to the organisation.”
He also claimed that the Project Verde acquisition and a Co-operative Group-wide efficiency programme dubbed Project Unity had taken its toll on the banking group, in addition to the aborted introduction of a new IT system.
Mr Richardson said: “When I left the business it had no regulatory issues.”
The bank’s former chief executive added that loans supplied by General Motors Acceptance Corporation made up 10 per cent of the Britannia Building Society’s loan book, but denied that the loans, which included sub-prime mortgages, had contributed to the later crisis at the bank.
He said: “This was a good book which earned Britannia more than £100m. GMAC loans were a source of strength and profit, and were no worse in terms of performance than those originated at Britannia.”
Mr Richardson received a severance package of £560,000, on his departrure from the banking group, in addition to one year’s contractual pay of £1.3m, and a pension of £2.1m.
