THE Bank of England has banned two former Co-operative Bank bosses from holding senior roles in the financial services industry for life.
The Prudential Regulation Authority (PRA), the Bank’s supervisory arm, brought the actions against Barry Tootell, the former chief executive, and Keith Alderson, who ran the lender’s corporate banking unit.
The PRA said both men have been banned from “a significant influence function” in any bank, building society or insurer regulated by the body.
The action comes after the Co-operative Bank nearly collapsed in 2013 after a £1.5bn black hole was discovered in its balance sheet. The bank had to be rescued by bondholders including US hedge funds in a move which saw the wider Co-op group’s ownership of the bank reduced to a 20 per cent stake.
The PRA said that between January 1 2009 and May 10 2013, Mr Tootell “did not exercise due skill, care and diligence” in carrying out his role as chief financial officer and later chief executive of the bank.
It added that in his final four years at the firm “Mr Tootell was centrally involved in a culture within the Co-operative Bank which encouraged prioritising the short-term financial position of the firm at the cost of taking prudent and sustainable actions to secure the firm’s longer-term capital position”.
The PRA added Mr Alderson “did not take reasonable steps” to properly assess the risks of the corporate loan book of the Britannia Building Society, which merged with the Co-op Bank in 2009.
The Co-operative Bank’s merger with the Britannia is widely seen as the beginning of a series of poor decisions made by senior Co-op executives that led to its near-collapse. The PRA added that as a result of the influence of Mr Alderson at times, bank staff took “a more optimistic view”.