Niall Booker hired as new Co-op Bank executive

It is hoped veteran HSBC banker Niall Booker will help nurse struggling Co-op Bank back to health

The Co-operative Group has appointed a veteran former HSBC banker as the new boss of its struggling banking business, which saw its investment rating slashed to junk status earlier this month.

Niall Booker, 54, spent 30 years at HSBC, quitting in 2011 after nursing the bank's sub-prime lending business back to health.

Booker replaces Barry Tootell, who stepped down as chief executive of the Co-op Bank when credit rating agency Moody's expressed concerns about the bank's capital position and even hinted that it might need taxpayer backing. The agency slashed the bank's investment rating by six notches and analysts have estimated that the Manchester-based bank could need to find up to £1.8bn to boost its capital cushion.

The bank, part of the wider Co-operative Group that includes supermarkets, funeral services and pharmacies, is in talks with Britain's financial regulator to agree on a plan to address the shortfall.

The group's new chief executive Euan Sutherland – who took over earlier this month – is expected to update the Co-op board on the talks at a meeting on Friday.

The Co-op bank has had a tumultuous few weeks. In March it unveiled a £600m loss, largely as a result of losses on bad loans and compensation for mis-selling payment protection insurance.

One of the UK's smaller banks, with 6.5 million customers and only 2% of the current account market, it had nevertheless planned to expand rapidly and was negotiating to buy more than 630 branches from Lloyds. Its ambitious plan, which would have given it an extra 4.8 million customers and a total of 942 branches, was welcomed by the government, which is keen to see new competitors to take on the existing big four banks.

 But the deal fell apart, with the Co-op blaming regulators and the difficult economic backdrop. Two weeks later came the Moody's downgrade. Last weekend it emerged that the Co-op had halted all new lending to small business customers.

Sutherland, who was previously chief executive of DIY group B&Q, said in a statement: "The board and I are confident that Niall will add tremendous value, helping us work through the complex issues that we currently face as we work to reposition our bank."

There has been speculation that the Co-op might wind down the bank, but Booker's appointment was being viewed as a commitment to the business.

Booker, who is expected to split his time between London and Manchester, said: "There are no quick fixes here, but with the support of the Co-operative Group, our staff and our loyal customer base, I am confident we will be able to stabilise and develop the franchise."

The Co-op had planned to release the details of Booker's appointment this morning, when the stock exchange reopens, but news of his appointment leaked over the weekend. The group does not have shareholders, but does have bondholders.

Booker, a Cambridge graduate, joined HSBC in 1981 and has worked across retail and corporate banking businesses. He was chief executive of HSBC in India and of the bank's Middle East operations before being posted to the US.

HSBC was last year fined $1.9bn (£1.2bn) by the US department of justice for "stunning failures of oversight", which allowed drugs cartels and terrorists to launder hundreds of millions of pounds through its US and Mexican businesses. HSBC had earlier hit problems with its sub-prime lending business – which provided loans to high risk borrowers – and Booker was parachuted in to put the business back on an even keel. He left the bank in October 2011 and has been looking for a new role since then, said a Co-op spokesman.

Sutherland said: "With his strong background across the banking sector, covering both retail and corporate, he is the ideal person to lead The Co-operative Bank at this important time in its history. He clearly brings the strategic and operational skills that we need to help take the bank to the next stage of its development."

Booker's experience of working with regulators is also understood to have been key.On Monday the Co-op refused to say when it had approached Booker or divulge his salary. But a spokesman said it was likely to be more than the £522,000 earned by his predecessor, as Booker has also been installed as the group's deputy chief executive.

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Article source : http://www.guardian.co.uk