Today, Neville Richardson (pictured) told the Treasury Select Committee that at the time he left the Co-op in 2011, the mutual’s finances were in good shape.
In spring 2013, the Co-op looked poised to buy Lloyds’ TSB branches in a takeover named Project Verde. But the deal collapsed, Moody’s downgraded the lender to ‘junk’ status and by June it was struggling to fill a £1.5bn capital hole.
Richardson said his successors were distracted by large projects.
“The eye has been taken off the ball. Because of Verde, the loan books have not been managed properly, as with the rest of the business.”
Formerly the chief executive of the Britannia Building Society, Richardson became the Co-op Bank’s boss after the two mutuals merged in 2009. But by 2011, he was increasingly worried about the number of projects the bank was taking on.
Project Unity, a restructuring programme, particularly concerned him, he said.
The Co-op group’s senior executives ignored his warnings that the strategy was “disastrous”, Richardson said. After the board overruled him, he left by mutual agreement in July 2011. He took on roles at M&S Bank and Countrywide, but resigned after the Co-op’s capital troubles emerged in June this year.
The summons by the select committee gave Richardson the floor for the first time to speak about his decision to leave the Co-op, after his contractural gagging clause elapsed.
When MPs also grilled him on the legacy of the Britannia loan books, Richardson said he had “no idea” why regulators would be worried. Impaired loans within the boom-era Optimum portfolio were “quite normal”, he said, and would not have gone bad if customers were quickly given a chance to make their repayments.
He insisted the Co-op Bank would be in better shape if he was still in charge: “If I had known that Verde would be as all-consuming as it was I would not have been in favour of it at all.”
