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| Bank of England bans two former Co-op Bank chiefs from top City jobs | Bank of England bans two former Co-op Bank chiefs from top City jobs |
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| Two former top officials at the Co-operative Bank have been banned by the Bank of England from holding senior positions in the City. | Two former top officials at the Co-operative Bank have been banned by the Bank of England from holding senior positions in the City. |
| The Bank is fining Barry Tootell, the former Co-op Bank chief executive, £173,802, and Keith Alderson, who ran the corporate and business banking division, £88,890. | |
| This is the first time Threadneedle Street has used its new powers to take action against individuals, and Tootell is the first boss of any bank to be formally censured since the 2008 crisis. | |
| Andrew Bailey, deputy governor of the Bank of England, said: “Banks that are not well governed have the potential to pose a threat to UK financial stability. The actions of Mr Tootell and Mr Alderson posed an unacceptable threat to the safety and soundness of the Co-op Bank, which is why we have decided a prohibition is appropriate in these cases”. | Andrew Bailey, deputy governor of the Bank of England, said: “Banks that are not well governed have the potential to pose a threat to UK financial stability. The actions of Mr Tootell and Mr Alderson posed an unacceptable threat to the safety and soundness of the Co-op Bank, which is why we have decided a prohibition is appropriate in these cases”. |
| The Co-op Bank had to be bailed out by hedge funds when a £1.5bn hole appeared in its books in 2013, in a move that caused shockwaves through the mutual movement and sparked a financial crisis in its former owner, the Co-operative Group of supermarkets and funeral homes. | The Co-op Bank had to be bailed out by hedge funds when a £1.5bn hole appeared in its books in 2013, in a move that caused shockwaves through the mutual movement and sparked a financial crisis in its former owner, the Co-operative Group of supermarkets and funeral homes. |
| Tootellwas acting chief executive for 14 months until getting the role full-time in September 2013 until he was placed on “gardening leave” in May 2013 following the bank’s downgrade to junk status. He resigned at the end of the year. | |
| The Financial Conduct Authority, which more usually takes action individuals, is still investigating and a formal review promised in November 2013 by George Osborne into what went wrong at the bank cannot begin until the FCA has completed its work. | |
| “We don’t comment on individual cases. While we have previously indicated that work will not start on the review until it is clear it will have no prejudicial effect on any future cases, we are not at that stage yet,” the FCA said. | |
| However, the Bank of England’s regulatory arm, the Prudential Regulation Authority, has now conducted its investigation. It found Tootell was involved in a culture at the bank that focused on the short-term at the cost of a more prudent approach to secure its long-term survival. | |
| Alderson was found not to have properly assessed the risks from the loans the Co-op took on when it merged with Britannia in 2009 nor escalated any concerns. The PRA found that one third of Britannia’s commercial loans had been made to just 10 customers and the Co-op’s advisors had recommended that more work was conducted on these loans before the deal was completed. The work did not take place. | |
| The PRA said: “The Co-op Bank’s culture resulted in an environment in which some staff felt under pressure to meet impairment forecasts that had previously been set ... On some occasions where budgets and forecasts were at risk of being exceeded, Mr Alderson challenged staff on the level of proposed impairment figures”. | |
| But the regulator also said that it had not found Tootell or Alderson deliberately or recklessly breached the rules and did not make findings of dishonestly or lack of integrity in issuing the bans and fines. |