Another banker fined, while the Co-op hires a cleaner

 

An embarrassing week for the British banking industry deepened yesterday as the troubled Co-operative Group called on a key player in the 2008 financial crisis to conduct a root-and-branch review – and a leading player in another bank meltdown was hit with a £30,000 fine.

The Co-op has brought in the political and City heavyweight Lord Myners – Labour's City minister at the time of the crisis – to review the way the business is run and sit on its board as senior non-executive director. He will chair a review of the 160-year-old group's governance and democracy and become the first outsider on the board.

His appointment follows the near-collapse of the Co-op Bank and its subsequent "bail-in", under which it will be 90 per cent owned by its bondholders. It also follows the resignation of the Co-op Group chairman Len Wardle and the arrest of the former Co-op Bank chairman Paul Flowers over drug allegations. It came as it emerged that insurer Legal & General had entered the fray for the Co-op's general insurance arm, appointing Goldman Sachs as an adviser.

Meanwhile Bradford & Bingley's former finance director, Christopher Willford, was fined over the lender's botched £400m rights issue in 2008. The Financial Conduct Authority (FCA) said he had failed to alert the board to potential risks such as details about profits, mortgage arrears and repossessions at the height of the credit crisis. B&B's mortgage book was eventually taken on by the state and its savings business sold to Santander.

The latest developments follow big fines for two taxpayer-backed banks, Lloyds and Royal Bank of Scotland, which will pay a total of £60m for mis-selling and sanctions busting. Co-op Bank was fined this year for PPI mis-selling.

Lord Myners said of the appointment: "I'm drawn to situations like this and I'm absolutely confident we can sort this out. The underlying business, the customer proposition, is absolutely tremendous. I'm doing it because the Co-op matters. It matters to me and it matters to its nine million members."

Lord Myners, who will be paid just £1 a year, said he considered the bank's problems, including a £1.5bn hole in its balance sheet, sorted out. "You can put a tick against that," he said.

George Osborne has ordered an independent inquiry into the bank and it faces probable probes by financial regulators. Separately, the Co-op has commissioned an independent "forensic" review into what went on at the bank.

That is expected to report around the same time as Lord Myners' governance review, in time for next May's annual meeting. Euan Sutherland, the new chief executive of Co-op Group, said: "What our customers, colleagues and wider membership base needs is an organisation and a business that they can be proud of again, and I believe that Paul [Myners] has a key role to play in helping us deliver that."

Mr Sutherland is due to present his own review of the Co-op's sprawling businesses early next year.

The FCA said B&B's Mr Willford had received information on 16 May 2008 that suggested B&B's financial outlook might be weaker than expected. He failed to raise this immediately with the board so that it could investigate and ensure that financial information provided to shareholders about the rights issue on 19 May was correct.

The information Mr Willford received showed that bad mortgage debts and repossessions had risen, while the difference between the rates B&B charged to, and received from, its customers had fallen. This could have led to a shortfall in profits, the FCA said.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate