Co-op’s ‘tragedy’ is not my fault says ex-boss

The customer-owned group yesterday revealed it will be left just 30 per cent of the Co-operative Bank under a £1.5bn restructuring, which will hand control of the ethical lender to owners of its bonds including US hedge funds, insurers and pension funds.

Mr Marks, who was chief executive of the funerals-to-supermarkets group from 2007 until this May, suggested the bank will be unable to retain its ethical ethos under its new owners. “It’s not a co-op, is it?” he said.

But under testy cross-examination by MPs on the Treasury Select Committee, he said as only a non-executive director of the bank he was not predominantly responsible for the current crisis, adding it was not “Peter Marks PLC” or a “dictatorship”.

“I cannot take responsibility for something I’m not in full control of, which was the bank,” he said.

The Co-op is finalising a rescue plan for its banking arm which will avoid a taxpayer bailout but cede control to investors including US hedge funds Aurelius Capital Management and Silver Point Capital –prompting fears of a customer exodus.

Mr Marks said: “Hedge funds are there to maximise profit, that’s what their sole purpose in life is. To be truly ethical you cannot do that.

“That does not mean the group cannot be ethical. Without the bank it can focus on its other businesses and be very ethical.”

Mr Marks said losing control to powerful investors could be a “good thing” for the mutual, by allowing the Co-op Group to tighten its focus elsewhere.

“In many ways it could be seen as a good thing because in actual fact it will force the Co-op to focus on less and not stretch its capital,” he added.

MPs, who are probing the collapse of the Co-op’s deal to buy more than 600 branches from Lloyds Banking Group – dubbed Project Verde – expressed incredulity at parts of his evidence.

Conservative MP David Ruffley accused him of “selective amnesia” over his failure to remember Lloyds’ warning over the Co-op’s capital strength in December 2012.