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* Former bank CEO accused of being "strategically forgetful"
* Tootell says concerns were about economics and integration
* Tootell says concerns intensified during 2012
* Aspects of evidence "disappointing" - TSC Chairman Tyrie
By Matt Scuffham
LONDON, Oct 29 (Reuters) - The former chief executive ofCo-operative Bank had reservations about its abortiveplan to buy hundreds of branches from Lloyds Banking Group in late 2011, he told lawmakers on Tuesday.
Barry Tootell stepped down in May this year after Moody'sdowngraded the mutual's debt rating to "junk" status, part of achain of events which resulted in the bank falling under thecontrol of bondholders including U.S. hedge funds.
Tootell told the Treasury Select Committee that he heldconcerns at various stages of negotiations over whether Co-ophad the financial strength to buy 630 branches from Lloyds, in adeal meant to create a new challenger to Britain's biggestbanks.
He said those concerns grew in 2012 when Co-op assessed the"economics of the business that we were acquiring and the costof integrating that business into our business".
Tootell said those issues culminated in him recommendingCo-op pull out of the transaction in April 2013 because it didnot have the required capital strength. He added that executivesat parent Co-operative Group had also harboreddoubts.
"There wasn't unanimous approval at all times. There werequite rightly questions about the viability of the deal,"Tootell told lawmakers on the committee.
The committee is examining why the deal was pursued prior toBritain's financial regulator identifying a 1.5 billion pound($2.4 billion) capital shortfall at Co-op Bank earlier thisyear.
Tootell provoked criticism from committee members for hisinsistence that Co-op Bank's capital position was strong at theend of 2012.
"We were very careful not to mislead the markets by usingterms such as 'strong' too glibly," Tootell said, citing thebank's core Tier 1 ratio of 9.2 percent.
Committee chairman Andrew Tyrie countered that the bank'scapital position was such that "a puff of wind could blow youover".
Conservative Jesse Norman took exception to Tootell's claimthat nothing in the corporate governance of Co-op could havebeen improved, while other members accused him of being"strategically forgetful" and of suffering "corporate amnesia".
Tyrie concluded the session, which had lasted for over twohours, by saying the committee had found aspects of Tootell'sevidence to be "disappointing".
