Co-op legal advisers expected to give evidence in Treasury investigation
Law firms that advised the Co-operative Bank prior to revelations about its governance and financial failings could be forced to give evidence before a Treasury investigation into the lender.
January 14, 2014 at 08:49 AM
3 minute read
Law firms that advised the Co-operative Bank prior to revelations about its governance and financial failings could be forced to give evidence before a Treasury investigation into the lender.
Legal Week understands MPs on a Treasury select committee review of the bank's failed bid for Lloyds TSB branches expect the Treasury to seek out evidence from legal advisers during the investigation.
While there is no suggestion of impropriety by any of the law firms, professional and financial advisers from KPMG and JP Morgan have already been grilled by MPs on their roles on deal, codenamed Project Verde.
In November, Chancellor George Osborne ordered an independent investigation into the Co-op Bank.
It will begin on the conclusion of ongoing enforcement investigations by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), which are expected to take several months.
The independent inquiry would likely request evidence from both Allen & Overy (A&O), the long-standing adviser to the Co-op Group, and Clifford Chance (CC), which took a role for the Co-op Bank on its £750m bid for 632 Lloyds branches in 2012.
The Co-op Group lost control of its banking arm in November 2013, after majority ownership of the financial institution transferred to a consortium of hedge funds.
"There is the feeling we want to get to the bottom of what happened, and we will be speaking to everyone we need to," a Treasury spokesperson said, adding that the investigation's terms of reference – which are yet to be published – would determine what type of evidence would be requested.
The Treasury-backed investigation will be led by a senior 'independent person' appointed by the regulators.
Legal advisers on Project Verde are also understood to have been on a shortlist of names to be interviewed by the Treasury Select Committee, but will not be called upon because of time constraints.
On 12 January, The Sunday Telegraph reported Andrew Bailey, the Deputy Bank of England Governor and Lord Levene, who mounted his own bid for the Verde branches, will appear before MPs.
Levene's unsuccessful £1.5bn bid in 2011 saw Slaughter and May take a role for NBNK, the banking venture the former Lloyd's of London chairman founded in 2010.
Other firms to have advised the bank in recent years include Linklaters and Addleshaw Goddard.
Allen & Overy, Clifford Chance and the Co-operative Group have yet to respond for requests for comment.
Separately, the Co-op Group today (14 January) confirmed group counsel Philip Hardman will be stepping down in the next few months, following the separation of the Bank's legal function.
In a statement, Co-op group general counsel Alistair Asher said: "Philip has been with the Group for 15 years and we are sad to lose someone of his expertise.
"I would like to thank Philip for the contribution he has made at The Co-operative and most recently for the key part he played in the Bank's recapitalisation. We all wish him well for the future."
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