THE CO-OPERATIVE bank’s ill-fated expansion plan was quietly endorsed by senior ministers, the bank’s ex-chairman claimed yesterday.
Reverend Paul Flowers, chair of Co-op Bank from 2009 until this summer, said Ed Balls, Mark Hoban and Vince Cable had all given “considerable nods and winks” about moves to takeover rival lenders during its four year acquisition spree.
The revelation, made at a Treasury select committee hearing, comes just days after the lender was taken over by a pack of US hedge funds, plunging its long held ethical stance into crisis.
Flowers, a Methodist minister, said Balls had greased the wheels of the bank’s disastrous merger with the Britannia building society in 2009 and said Hoban had encouraged the bank to bid for 632 Lloyds branches being sold last year.
Business secretary Vince Cable gave “nods of support” for the Verde deal, Flowers added.
Claims senior government officials were cheerleading the bank’s proposed expansion will sharpen scrutiny of how the bank was allowed to get into such trouble.
In June regulators said the bank needed to fill a £1.5bn blackhole in its balance sheet, which ultimately led to this week’s deal turning 70 per cent of the lender over to its creditors.
However, committee chair Andrew Tyrie questioned whether Flowers had the financial acumen to lead a bank
Flowers, who worked as a banker between 1968 and 1972 at NatWest, said: “I would judge my experience was largely out of date to the needs of contemporary banking. I believe my skills are in terms of governance.”
Flowers also said former Northern Ireland minister Owen Paterson had tried to encourage him to takeover troubled lender Presbyterian in 2010 when they met at the Conservative party conference. Flowers dubbed the outfit a “basket case” and refused.