The Co-operative Group failed to heed warnings about the precarious financial position of its bank in its drive to expand

The Co-op Bank ignored repeated warnings about its precarious capital position and pushed ahead with a deal that would have trebled its size despite evidence that it was unlikely to be able to afford the transaction. Senior managers at the scandal-hit Co-op Bank admitted to regulators five months before the lender withdrew from a bid to buy 631 Lloyds Bank branches that the size of the bank’s capital black hole made the deal impossible. The admission came at a meeting in November last year with officials at the Financial Services Authority where Barry Tootell, the Co-op’s chief executive at the time, was warned that a stress test on the lender had shown a shortfall in the bank’s capital planning buffer of about £1bn. Despite the capital warning, confirmed in a letter to the bank in January, it took until April 24 for the Co-op Bank to withdraw from the Project Verde deal......Read more HERE