Co-op bank refused the PMS

Outgoing Presbyterian Moderator Rev Dr Donald Patton during a protest outside Church House in Belfast during the Presbyterian Synod
Outgoing Presbyterian Moderator Rev Dr Donald Patton during a protest outside Church House in Belfast during the Presbyterian Synod

The Co-op Bank refused a request by government to take over the troubled Presbyterian Mutual Society (PMS) in 2010, it has been revealed.

The information was disclosed by the former chairman of the bank, Paul Flowers, while giving evidence to the House of Commons Treasury Committee about financial troubles at the Co-op.

Mr Flowers said a senior Stormont official had asked him to take the mutual over, the official describing himself as approaching the talks “as a snake oil salesman”.

There was a further meeting with then secretary of state Owen Paterson and a senior civil servant, he added.

But Mr Flowers said he refused to take it over because it had “a black hole” in its books, leaving it “£100m adrift”.

It is understood that the PMS administrator also made a number of approaches to financial institutions but that they too were in similar difficulties and there was no deal.

Former Presbyterian Moderator Stafford Carson, who campaigned for a rescue package for the mutual, said yesterday: “We were all aware that efforts were being made and that approaches were being made by civil servants to various institutions. They were looking at different possibilities but of course none of them turned out to be fruitful.”

A Department of Enterprise and Investment (DETI) spokeswoman said yesterday: “In finding a just and fair solution to the PMS crisis and to minimise the distress suffered by the members it was essential that all feasible options were considered and explored.

“The Northern Ireland Executive’s preferred solution to the PMS crisis was a commercial takeover by an external financial institution. In 2010, there was commercial interest in PMS from the Co-operative Bank, however the bank subsequently withdrew its interest.

“As it did not prove possible to develop a commercial solution, a package of financial assistance was agreed by the Executive to deal with the hardship and difficulties caused to members by the collapse of the society.”

The mutual, which had over £300m of deposits, suffered a run in the 2008 banking crisis. Six board members later stood down as directors and DETI was found guilty of maladministration.

In 2011 a rescue package was agreed with £200m government loans, £25m from the Treasury and £1m from the church. As of June this year the mutual was on target in repaying its loans, having paid back £24m by that time.