A letter from a top Bank of England regulator has said disputed several claims by the former head of the Co-op Bank, Neville Richardson.

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.

“My concern was not just that the former Britannia assets had contributed a significant proportion of the Co-op bank's loan losses but that the nature of those assets meant they were likely to lead to further impairment,” Bailey's letter said.

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. Ratings agencies and the Bank's Prudential Regulatory Authority had earlier blamed Britannia merger for the company’s troubles also also some parts of the bank’s loan books.

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.