Investigation launched into Co-op failures

13 June 2013

Leaders of the Treasury Select Committee (TSC) have confirmed that an investigation into the Co-operative Bank's failed bid for hundreds of Lloyds Banking Group branches has been launched.

The company had lined up a significant bid for 632 outlets in April, but the 'Project Verde' deal collapsed, raising questions about the bank's financial position, which lead to a credit ratings cut in May and ultimately the hiring of Richard Pym as the new chairman of the Co-op Bank.

European laws dictate that Lloyds must shed the branches by the end of the year and the failure of 'Project Verde' has delayed this process.

Lloyds chief executive Antonio Horta-Osorio and chairman Sir Winfried Bischoff will both give evidence to the TSC investigation into the shanbles during a Parliamentary session on June 18th.

The Co-op has come under scrutiny in recent months, with Moody's downgrading the bank to junk status. The company also stopped issuing business loans in May, as it looked to reassure the public of its financial situation, Reuters reports.

Chairman of the TSC Andrew Tyrie explained what the inquiry would entail.

"We will want to know how The Co-operative Bank's bid was allowed to progress to such an advanced stage, why it collapsed and what will now happen to these branches and their customers," he commented.

By Asim Shah

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