Ex bosses set to avoid refund to Co-op bank

THE Co-operative Group is unlikely to be able to claw back money from former bosses despite uncovering a £1.5bn hole in its bank’s balance sheet, according to a report.

THE Co-operative Group is unlikely to be able to claw back money from former bosses despite uncovering a £1.5bn hole in its bank’s balance sheet, according to a report.

The Sunday Telegraph said owing to the mutual’s complex structure, the Co-op is not expected to be able to recoup payouts to former chief executive Peter Marks or former bank head Neville Richardson.

That is despite a recently unveiled rescue plan for the Co- operative Bank which will force bondholders to take a haircut on their investment.

Under a planned “bail-in”, bondholders will be forced to take losses on their investment and offered shares in the banking arm, a move which will result in a stock market listing for the UK’s biggest mutual.

The Co-op, which has around 4.7 million banking customers, is also planning to raise funds through the disposal of its insurance business, although the largest part of the £1.5bn rescue is coming from bondholders. The Co-op’s woes stem from toxic commercial property loans acquired through a merger with the Britannia building society in 2009 which created a financial “super-mutual”.

Mr Richardson was chief executive of the Britannia – then Britain’s second-biggest building society – before heading the Co-op’s banking arm.

When Mr Richardson left the Co-op in 2011 he received a total payout of £4.6m.

Mr Marks, who handed over to new chief executive Euan Sutherland in May, did not receive a pay-off when he left. He could be in line for a maximum long-term bonus of £994,000, due to vest in 2014, although the most recent scheme only vested at 11% of the maximum.

The Co-op’s capital shortfall was identified by the Prudential Regulation Authority (PRA), the new City watchdog.

Last week it ordered the UK’s eight biggest lenders to raise another £13.4bn to plug a higher-than-expected £27.1bn billion hole in their finances.

The Co-op could not be reached for comment.

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