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Tory MP calls for TSC to investigate Co-op ‘blow up’

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Conservative MP Brooks Newmark is pushing for the Treasury select committee to investigate the Co-operative Bank over major capital shortfalls and its failed bid for Lloyds Banking Group branches.

Earlier this month, Co-op Bank chief executive Barry Tootell quit immediately after Moody’s downgraded the bank to junk status and warned it may need taxpayer support after heavy losses on Brittannia Building Society loans. The Co-op group has ordered a strategic review of the firm in an effort to plug the hole.

The news came just weeks after the Co-op pulled put of a deal to buy 632 Lloyds Banking Group branches, citing the poor economic climate.

TSC member Newmark says: “This is another blow-up in the financial services sector and the TSC should be looking into it so I will be pushing for that.

“Someone is to blame and it is a combination of the regulator, the Bank of England and poor financial management.”

Newmark joined rival bidder and former NBNK chair Lord Peter Levene in questioning the wisdom of awarding Co-op the deal to buy the Lloyds branches and demanded to know what due diligence was done on the bank.

Banking consultant Mehrdad Yousefi says: “The TSC should certainly look into the Co-op branch deal. It is astonishing the firm was chosen to buy the branches and shows that the regulators are not doing their job.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. If I remember it right wasn’t it a subsidiary of Britannia that was lending heavily to the buy to let market. When will politicians learn that over stimulating the property market always comes back to haunt you.

    The new help to buy scheme although on the service good news for the consumer could in fact be the next big forerunner to a much larger financial crisis if regulators take their eye off the ball and insist that mortgage brokers and lenders adhered to sensible lending rules.

    In some ways I do feel sorry for Banks & Building Societies as they had been told by politicians to lend to make them re-elected of and also act responsibly by keeping capital adequacy. Those two objectives are not compatible.

  2. As usual Government policy; pension transfers, low cost endowments (developed to boost home ownership) and lending to those that shouldn’t be lent to (again to boost home ownership) has led to financial meltdown.

  3. Julian Stevens 3rd June 2013 at 7:56 pm

    This looks like yet another train wreck that the FSA should have seen coming and averted. But it was evidently too busy building into its RDR endless unforeseen problems. That’s what you get when an unregulated monster is allowed free rein to do whatever it wants without having to account to anyone.

    And now that the FSA has been rebadged, who if anyone will be held to account?

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