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.”