Former Co-op Bank executives banned from senior City roles

The Prudential Regulation Authority has banned two former executives of the Co-operative Bank from holding senior jobs in the City.

The PRA banned former chief executive Barry Tootell and former managing director of the bank’s corporate and business banking division, Keith Alderson, and slapped fines on them of £173,802 and £88,890, respectively for their involvement in the bank’s near-collapse back in 2013.

The regulator said that between January 2009 and May 2013, Tootell failed to exercise due skill, care and diligence in carrying out his roles as chief financial officer and CEO.

“In particular, between 22 July 2009 and 10 May 2013, Mr Tootell was centrally involved in a culture within the Co-op Bank which encouraged prioritising the short-term financial position of the firm at the cost of taking prudent and sustainable actions to secure the firm’s longer-term capital position,” it said.

As far as Alderson is concerned, the PRA said he did not take reasonable steps to ensure the bank adequately assessed risks arising across the corporate loan book of the Britannia building society, which was purchased by the Co-op in 2009.

“Mr Tootell’s and Mr Alderson’s breaches had the clear potential to affect the safety and soundness of the Co-op Bank and the PRA has concluded that they are not fit and proper persons to carry out a significant influence function at a PRA-authorised firm on the grounds of a lack of competence and capability.”

Andrew Tyrie, chair of the powerful parliamentary cross-party Treasury select committee said the sanctions, while welcome, reflected a "lack of determination and the wrong culture at the regulators", given the action was taken under the older and much criticised "Approved Persons Regime" rules.

"Both weaknesses were identified by the Parliamentary Commission on Banking Standards four years ago," Tyrie said in a statement.

“The greater responsibility on firms that comes with the Senior Managers’ and Certification regimes – now better supported by deferral and claw back of remuneration – is a huge improvement on the old regime. But the regulators need to shoulder more responsibility, too. They have to be capable of exercising enough judgement to interpret the rules, and determined enough to apply them. They appear to have been so in this case.”