Former Co-op Bank bosses fined and banned by PRA

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The PRA has issued lifetime bans and fines to the former chief executive and managing director of the Co-op Bank.

Former chief executive Barry Tootell and former managing director of the corporate and business banking division Keith Alderson have been fined £173,802 and £88,890, respectively.

The pair are also blocked from holding significant influence positions in regulated firms.

Tootell was chief financial officer of the bank until July 2011, when he also took on the role of acting chief executive, while Alderson served as as director of corporate banking and later the managing director of the corporate and business banking division.

Both quit the bank in May 2013, shortly before the firm revealed a £1.5bn shortfall in capital and pulled out of a deal to acquire 630 branches of Lloyds bank, securing an emergency bailout by bondholders which reduced the Co-op Group’s stake in the bank to 20%.

In an investigation of their roles prior to the bank’s near-collapse, the PRA today ruled that, following its August 2009 merger with Britannia Building Society, Tootell failed to institute proper risk management structures at the bank, and “contributed to a culture in Co-op Bank which focused on improving the short-term financial position of the Firm at the cost of taking prudent and sustainable actions to secure the longer-term capital position of the Firm.”

These included the accounting treatments of a project to update and unite the firm’s IT systems, and a failure to to ensure proper financial due diligence of the Britannia Corporate Loan Book.

The regulator added that Alderson “did not take reasonable steps” to ensure that Co-op Bank adequately assessed risk arising across the Britannia Corporate Loan Book.

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

“The new senior managers regime, which will be introduced in March, will further ensure that senior managers are held duly responsible for their actions.”