Treasury Select Committee chair Andrew Tyrie has accused the Chancellor of unreasonably withholding information relating to the Co-operative Bank’s failed takeover of Lloyds Banking Group branches.
The Co-op Bank beat NBNK in the bidding process for 632 Lloyds Banking Group branches in 2011. But the Project Verde deal collapsed in April 2013 after the Co-op Bank revealed a £1.5bn capital black hole and turned to bondholders to fill the gap.
In a series of letters published yesterday, Tyrie requested information from George Osborne three times on contacts between the Government and the banks involved in the bidding process.
The TSC is seeking to establish whether the Treasury applied undue pressure on Lloyds to choose Co-op Bank as the favoured bidder.
In response to Tyrie’s first two requests for information, Osborne said the Treasury will provide details of relevant conversations and meetings to the independent investigation into the events around the near-collapse of Co-op Bank. He said providing this to the investigation before releasing it to the TSC is “the best approach”.
Osborne said the investigation will begin when it is clear it will not prejudice any enforcement actions.
Tyrie has asked for information on what contacts Osborne and other Treasury ministers, in particular Mark Hoban and Greg Clark, had in respect of the bidding process with: the Co-op Bank and Group, Lloyds, NBNK and the regulators.
On 23 July, Tyrie wrote to the Chancellor to express “concerns” about his responses.
Tyrie said any enforcement action might take months or years to conclude, and it is therefore “not reasonable to expect the Committee to wait indefinitely for the information”.
He said: “The Committee requests that you reconsider your position and release to the Committee fuller information about the frequency and content of these contacts than you have supplied so far.”
In a final letter dated 1 August, Osborne said: “The Treasury – both at ministerial and official level – was in regular contact with the regulator and Lloyds during this period on a wide range of issues including the Verde vid.
“I can confirm that in addition, we were in regular contact with representatives of the Co-operative Bank once their status had been confirmed by Lloyds as the preferred bidder. We also had periodic contact with representatives of NBNK, including Lord Levene.”
He added that while ministers and officials met with relevant parties “from time to time” to monitor progress on the deal, decisions about whether and how to proceed “were commercial matters for the parties to the transaction”.