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 ofBritain's Co-operative Bank said he stepped downbecause he opposed its plans to buy hundreds of branches fromLloyds Banking Group.

Rodney Baker-Bates told parliament's Treasury SelectCommittee that he considered the planned purchase of 630branches which Lloyds had been ordered to sell by Europeanregulators a "giant step too far", and that his concerns wereignored by other Co-op executives.

"I failed to win the argument. I set out to convince theboard that I felt Verde (the name given to the sale) was a giantstep too far," he told parliament's Treasury Select Committee onTuesday.

Baker-Bates retired from the bank's board in January 2012and no reason was given for his departure at the time.

The sale collapsed in April last year and the full scale ofthe Co-op Bank's problems later became apparent when a 1.5billion pound ($2.5 billion) capital shortfall was exposed andit was forced into a restructuring which saw it fall under thecontrol of bondholders including U.S. hedge funds.

The bank's problems were exacerbated in November when itsformer chairman, Paul Flowers, became embroiled in a drugsscandal. Baker-Bates and a second deputy chairman, David Davies,had been brought on to the board of Co-op Bank in 2010 tocompensate for Flowers, a Methodist minister, having no bankingexperience.

The committee is examining why Co-op pursued the purchaseand whether it was subjected to undue political interference.

Davies also told the committee that he also opposed thepurchases of branches from Lloyds. He said that he became awarein January 2012 that Lloyds had misgivings about selling thebranches to the Co-op and had "ceased engaging on capital andconduct issues".

Baker-Bates told the committee he was overlooked as acandidate for the chairman's role, in favour of Flowers, who hewas told at the time had scored highly in psychological tests.