15th January 2016
Two former Co-op Bank executives have been fined and banned following disastrous decisions at the bank that pushed it to the brink of collapse.
The Prudential Regulation Authority (PRA) fined former chief executive Barry Tootell £173,800 and banned him from holding any position of significant influence.
It also fined the Keith Alderson, the former managing director of the corporate and business banking division, £88,900 and banned him from holding position of influence in financial services.
The pair can no longer take senior positions in any bank, life company or investment firm.
The action comes after a string of disasters at the bank which led to its near collapse in June 2013, when a £1.5 billion capital shortfall was revealed.
The PRA said Tootell was ‘centrally involved’ in a culture that prioritised short-term gains for the bank over its long-term capital position. Tootell was also accused for failing to structure the risk team well enough to enable it to challenge the bank’s business policies.
The banking regulator said Alderson failed to take reasonable steps to assess the risk on the Britannia corporate loan book when the bank acquired it in 2009. This acquisition was blamed for the shortfall problems at the bank.
Andrew Bailey, chief executive of the PRA, said: ‘Banks that are not well governed have the potential to pose a threat to UK financial stability.
‘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.’