The Co-operative Group's former chief executive has warned that a restructuring of the mutual's banking business would destroy its ethical values, but refused to be held personally accountable for the crisis that engulfed the lender.
On Tuesday, Peter Marks appeared in front of the Treasury select committee - a day after the Co-op agreed to hand a majority stake in its bank to hedge funds and other institutions, as part of a plan to raise £1.5bn of fresh capital. Mr Marks, who left the mutual shortly before the capital shortfall was identified, said there was a fundamental clash between the Co-op's values and its new ownership structure.
"It's not a Co-op," he said. "Hedge funds are there to maximise profit - that's what their sole purpose in life is. To be truly ethical they can't do that."
His comments undermined a promise by the Co-op Group's new management team to stay true to the bank's ethical principles, even though the Co-op will only own 30 per cent of the bank in future.
They also came as Len Wardle, who has chaired the Co-op Group for six years, announced he would leave the role next May. Mr Wardle called for the mutual to break with tradition by replacing him with an independent chairman rather than a Co-op member.
Mr Marks said the crisis at the Co-op Bank was a "tragedy" - but could ultimately be beneficial as it would force the group to narrow its focus and preserve capital.
"I think it's a tragedy - for the group, for the movement, for me personally . . . But there was a degree of inevitability as the Co-op was trying to stretch its capital across too many businesses," he said.
During often heated exchanges at Westminster, MPs accused Mr Marks of having "selective amnesia" and being "out of your depth" after he failed to remember crucial conversations about the Co-op Bank's capital position, and explain why he failed to deal with its problems.
The former chief sought to deflect blame for the bank's troubles, saying he was only a non-executive director of the business and did not have the regulatory clearance to run the bank. However, he did admit he was the "driving force" behind the Co-op's attempts to triple the size of its banking arm by buying 630 branches from Lloyds Banking Group.
Mr Marks denied that the pursuit of the Lloyds business had been a misjudgment, claiming it would have solved the Co-op's capital problems. He also played down the impact of the Co-op Bank's merger with the Britannia building society, which saddled the lender with billions of pounds of bad debts.
"The bank was a victim of the financial crash, of the financial crisis," he said. "Loans made in Britannia have gone to some extent sour because of the economy."
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