The fallout from the Co-op bank’s near collapse in 2013 has been significant and drawn out. The latest remprimand has focused on two of the top dogs at the height of its woes – former CEO Barry Tootell and the ex-head of corporate banking Keith Alderson. Both have been banned from the City for life by the Bank of England.
On top of that, they’ve both been hit with hefty fines. Tootell has to cough up £173,802 for ‘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', according to the BoE’s Prudential Regulatory Authority. Alderson was fined £88,890 and came under fire for not properly assessing the risk of the corporate loan book inherited from Britannia, the building society that merged with Co-op in 2009.
The regulator also criticised the Co-op Bank’s culture, which reportedly resulted in ‘an environment in which some staff felt under pressure to meet impairment forecasts’.
The PRA’s statement stops short of calling their behaviour a total shambles, but it’s near enough with the assessment that the pair ‘are not fit and proper persons to carry out a significant influence function at a PRA-authorised firm on the grounds of a lack of competence and capability’.
The Co-op Bank nearly collapsed after the discovery of a £1.5bn capital black hole in 2013, needing two bail-outs and was left in such a sorry state that the PRA couldn’t even dish out the punishment it wanted to. The bank was criticised for ‘serious and wide-ranging failings’ in the summer of 2015, but the PRA said a bruising fine ‘would not advance the PRA’s statutory objective to promote the safety and soundness of the firms it regulates’. Usually in such circumstances, the PRA said a £120m fine would be appropriate.
There are signs the Co-op Bank's reputation is bouncing back – it was named the most improved brand in YouGov's recent BrandIndex - but news like this latest ruling won't help. The Co-op will be hoping that these severe punishments will help it draw a line under the scandal.