Neville Richardson, the former head of the Co-op Bank is facing criticism from the Bank of England after he blamed the regulators for the troubles of the bank.

Mr Richardson gave evidence to the Treasury select committee for getting rid of all the blame for the bank's troubles. Richardson dismissed suggestions that the banks decision to merge with Britannia Building Society had resulted in financial problems for the bank, contradicting the position of Andrew Bailey, the head of the Bank of England's Prudential Regulation Authority.

Mr Richardson said that the he had alerted the directors of Co-operative Group plans to merge with Lloyds Banking Group's Verde will lead to troubles for the bank. The bank needs £1 billion to fill the gap in its finances and the management is also considering cutting or cancelling income paid to the bond holders of the bank.

Meanwhile, Sutherland, the chief executive of the Co-op Group has urged for support of the bank plan to revive the organisation, saying that it represents the best interest of the stakeholders.

Under the plan, bondholders will provide £500 million of capital for revival of the bank. The group reported loss of £709 million, mainly due to a loss of £559 million in the banking arm that is facing £496 million bad debt charge.