Companies  

Co-op mess ‘no surprise’ to Treasury select committee

The chairman of the Treasury select committee and Conservative MP for Chichester said it was “already clear from evidence to the committee that there was something seriously amiss with governance at the Co-op”.

He added: “Sir Christopher’s findings are shocking, but not surprising. Governance matters. Co-op’s six million members have been the losers.”

Mr Tyrie also confirmed the TSC would be taking more evidence on Co-op governance from Lord Myners this week.

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The TSC is currently conducting a review of Lloyds Banking Group’s divestment of its 632 ‘Project Verde’ branches, which brought to light the £1.5bn capital shortfall on Co-op bank’s balance sheet following its botched bid in June last year.

The review, which should be published later this year, is expected to include analysis of Co-op’s failed bid.

The government’s banking reform bill approved late last year introduced a senior managers’ regime, subjecting decision-makers in banks to higher standards that mean if they fail in their duties they will be held to account.

Analyst view

Louise Cooper, CFA, founder of Cooper City, said: “It is truly extraordinary. From the sneak peaks this report gives us of board meetings both at the bank and the group, discussions about store locations or Co-op values were given much greater time than capital adequacy at the bank, which seems barely to have been mentioned.

“Warning letters from the financial regulator seem to have been ignored. And little due diligence was done on the Britannia acquisition, which more than doubled the size of the Co-op bank in the middle of a financial crisis.”