Bank of England's chief regulator blames Britannia for Co-op's near collapse

 

The Bank of England’s chief regulator fired what MPs today called “an Exocet” at Britannia Building Society bosses, unequivocally blaming them for the near collapse of Co-op Bank.

Asked by MPs on the Treasury Select Committee who should be held responsible for the financial disaster, Andrew Bailey, deputy governor of the Bank, responded: “The management of Britannia [Building Society].”

He also accused them of being “in denial” about its problems. That management was led by Neville Richardson who, in an earlier hearing, strongly denied that Britannia’s risky commercial property loan book could have sent the Co-op spiralling into financial chaos after the two merged in 2009.

Richardson ran the Co-op Bank after the deal and walked away in 2011 with more than £4 million.

Bailey said Britannia “didn’t have the risk-management skills” to manage commercial property lending and described Co-op’s “attitude” towards impaired loans as “out of line not only with  what we felt but what other parts of the industry felt” after the Britannia merger.

He also strongly denied claims that Bank of England officials condoned traders manipulating the foreign exchange market.

Mr Bailey said a full legal review of the claims had been launched.

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