James Moore: Mervyn King's the man who may shed light on this Co-op conspiracy theory

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The Independent Online

Outlook Was NBNK denied the chance to buy Lloyds Banking Group's 600-branch Verde business because of a devilish conspiracy organised by politicians in support of the Co-op?

That was the picture presented by NBNK's former chairman Lord Levene and chief executive Gary Hoffman yesterday.

Quite a few of the MPs on the Treasury committee who questioned them seemed inclined to scoff a bit.

From one standpoint that's understandable enough. The chances of such an organised plot against NBNK succeeding seems rather unlikely given the nature of Britain's often dysfunctional government.

On the other hand, those MPs are very much a part of a system where secrecy is endemic, business is frequently conducted via a nod and a wink and where messages are often delivered en passant.

As such it was disingenuous of them to criticise Lord Levene for having little in the way of hard evidence for his claims.

What we do know is that the Co-op had powerful supporters in a Government which just happened to be the biggest – indeed the controlling – shareholder in Lloyds.

Lloyds would find it very hard to ignore their wishes, were they communicated to the bank as has been implied.

In actuality it may very well be, as John Thurso suggested at the end of the hearing, that what Lloyds really wanted to do all along was to float Verde off, something it is now doing with Verde having been renamed TSB.

This would clearly be its best option because it isn't exactly in Lloyds' interests to see the emergence of a vibrant, and aggressive, challenger. It's hard to see TSB becoming that given it will be reliant on Lloyds systems and processes.

But questions remain. Lord Levene may have overstated his case a bit and laid himself open to accusations of sour grapes. No one likes a sour loser.

Here's the thing, though. He claims he was told by no less than Mervyn King that the decision on Verde's future would be political. He also says Lord King recently gave his blessing for Lord Levene to reveal his identity as the source for this assertion.

If that's the case, then we need to hear from Lord King. After all, he had no axe to grind in this fight. Yesterday's hearing muddied the waters, and contained a good bit more heat than light. Lord King could clarify matters.

His retirement just got a whole lot more interesting. Perhaps he intended for that to happen.