Former Co-operative Financial Services chief executive David Anderson has refused to take the blame for the bank’s troubles despite overseeing the merger with Britannia Building Society.
Anderson worked at the Co-operative Bank from 2005 to 2009 and led the 2009 Britannia merger, which has been heavily criticised by MPs. The deal led to the Co-op Bank needing a £550m provision for bad commercial loans this year.
During the Treasury select committee inquiry into the Co-op Bank a string of executives have denied responsibility for failings at the bank including former Co-operative Group chief executive Peter Marks and former Co-operative Bank chairman Reverend Paul Flowers.
The Government is overhauling the approved persons regime for deposit-taking institutions to introduce much greater individual responsibility into the sector.
In April this year the Co-op Bank withdrew its bid to buy 632 Lloyds Banking Group branches after it discovered a £1.5bn capital black hole in its balance sheet.
Earlier this month the bank unveiled a rescue plan that would see the Co-op group take a 30 per cent stake and bondholders controlling 70 per cent.
Speaking to the TSC today, Anderson said the £550m provision was not the only cause of the Co-op’s problems.
He defended due diligence on the deals conducted by Co-op Bank and its advisers and blamed poor management since he left the organisation in 2009.
Anderson pointed the finger at the “distraction” of buying 632 Lloyds’ branches with an estimated £100m spent on the failed bid.
He also blamed a £500m write-off for an IT project, £300m provisions for payment protection insurance misselling and an accounting change to make loans in default after 30 days instead of 90 days.
Anderson said: “The fact there are some write-offs is inevitable and only £80m of those loans are actually losses. A provision of £550m alone would not have created the problems we have now.
“Clearly the loan book was considerably worse than we thought it was going to be, and I wouldn’t represent it any other way, but I don’t believe it is sufficient to create the situation the bank now finds itself in.”
Anderson, a former Yorkshire Building Society chief executive, launched a robust defence of the mutual model in the wake of the crisis.
He said: “In every sector there are businesses that do well and those that make mistakes and it is clear mistakes were made in this case. I fundamentally disagree with anyone who says it undermines the financial mutual model. Successful mutuals are a big and important part of our financial landscape in the future.”