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Regulator penalises failed bankers

Banning orders for two former Coop bank executives

Co-op BankTwo former Co-operative Bank executives whose decisions almost caused it to collapse have been banned from holding senior banking positions.

Barry Tootell, who was chief executive, has been penalised by the regulator for “breaches” in the running of the bank.

Keith Alderson, a former managing director of the corporate and business banking division, was also banned.

The pair can no longer take senior positions in any bank, life company or investment firm. Mr Tootell was fined £173,802 and Mr Alderson £88,890.

The action by the Prudential Regulation Authority comes two years after a £1.5 billion capital shortfall was revealed. Co-op Bank almost collapsed even though it had agreed to buy from Lloyds the business which became TSB.

Cooperative Bank’s problems were made worse after its disastrous acquisition of Britannia Building Society in 2009.

The PRA said Mr Tootell “did not exercise due skill, care and diligence in carrying out his role as chief financial officer and later chief executive”.

Mr Alderson was accused of failing to take reasonable steps to ensure that Co-op Bank adequately assessed risk arising across the Britannia Corporate Loan Book.

Andrew Bailey, PRA chief executive said: “This action makes clear that there are serious consequences for senior individuals who fall short of the PRA’s expectations.”

The PRA added that Mr Tootell “was centrally involved in a culture within the Co-op 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 Institute of Directors warned all directors of the danger of complacency on boards. Simon Walker, Director General of the IoD, said: “This is further proof that the leadership of the Co-operative Bank in the run up to its spectacular failure was woefully lacking in the skills, knowledge, and decision-making needed for a major financial institution.

“It is stark reminder that even brands which carry a positive public reputation can have it snatched away from them if their corporate governance isn’t up to scratch.

“The Prudential Regulatory Authority has censured two executives  for putting short-term profits ahead of the long term sustainability of the bank, but there was clearly also a failure on the part of the whole board.

“Non-executive directors are there to constructively challenge executives on their actions. Where they do not, as at the Co-op, it can be to the great detriment of the organisation’s employees and customers.

“The Co-op traded on its reputation as an ethical and reliable bank, but while senior executives and the board may have believed their own hype, they manifestly failed to embody these principles, with devastating results.”



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