UPDATE 1-Co-op Bank's deputy chair opposed Lloyds branch purchase
* Baker-Bates says branch deal was a 'giant step too far'
* Baker-Bates says his concerns were ignored by board
By Matt Scuffham
LONDON, Jan 28 (Reuters) - The former deputy chairman of Britain's Co-operative Bank said he stepped down because he opposed its plans to buy hundreds of branches from Lloyds Banking Group.
Rodney Baker-Bates told parliament's Treasury Select Committee that he considered the planned purchase of 630 branches which Lloyds had been ordered to sell by European regulators a "giant step too far", and that his concerns were ignored by other Co-op executives.
"I failed to win the argument. I set out to convince the board that I felt Verde (the name given to the sale) was a giant step too far," he told parliament's Treasury Select Committee on Tuesday.
Baker-Bates retired from the bank's board in January 2012 and no reason was given for his departure at the time.
The sale collapsed in April last year and the full scale of the Co-op Bank's problems later became apparent when a 1.5 billion pound ($2.5 billion) capital shortfall was exposed and it was forced into a restructuring which saw it fall under the control of bondholders including U.S. hedge funds.
The bank's problems were exacerbated in November when its former chairman, Paul Flowers, became embroiled in a drugs scandal. Baker-Bates and a second deputy chairman, David Davies, had been brought on to the board of Co-op Bank in 2010 to compensate for Flowers, a Methodist minister, having no banking experience.
The committee is examining why Co-op pursued the purchase and whether it was subjected to undue political interference.
Davies also told the committee that he also opposed the purchases of branches from Lloyds. He said that he became aware in January 2012 that Lloyds had misgivings about selling the branches to the Co-op and had "ceased engaging on capital and conduct issues".
Baker-Bates told the committee he was overlooked as a candidate for the chairman's role, in favour of Flowers, who he was told at the time had scored highly in psychological tests.
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