FORMER Co-operative Bank chairman Paul Flowers has insisted the mutually owned institution had backing from leading Coalition politicians in its ultimately aborted attempt to buy 632 branches from Lloyds Banking Group.

The deal, which included the 185-strong Lloyds TSB Scotland network, collapsed earlier this year, revealing a £1.5 billion capital shortfall at Co-op Bank.

Reverend Flowers, a Methodist minister and former Labour councillor, said: "There was not political interference, there was not political pressure but there was political goodwill for the deal to proceed." The treasury minister Mark Hoban, he said, "had many telephone conversations and meetings" with Co-op Group chief Peter Marks.

"The Treasury was indicating its pleasure and support for such a deal as this, because of the way a challenger bank could be created," he told the Treasury committee.

The Co-op was also made to understand that Secretary of State Vince Cable, supported the deal, he claimed.

"When you have senior Government ministers in different circumstances indicating their encouragement for what you are doing, you get a sort of feeling that it has a secular imprimatur," he said.

Rev Flowers said that Co-op Bank also had weekly meetings with regulators.

He revealed that as a young man he had worked for Westminster Bank, now part of Royal Bank of Scotland, for four years before leaving to study theology.

"I would judge that experience was largely out of date, when it comes to the needs of the contemporary bank but nevertheless, I did have experience," he said.

His appointment as bank chairman in 2010 was due to his governance skills, he added.

He added that he believed his resignation in June showed he took responsibility for the bank's plight.

A restructuring of Co-op Bank has seen majority ownership pass to hedge funds. It recently announced plans for 50 branch closures.