Lloyds Banking Group 'knew Co-op had shortfall of capital'

The bosses of Lloyds Banking Group have told MPs that they knew there was a black hole in the accounts of the Co-operative Bank, four months before a vital deal with them collapsed.

The chairman and chief executive of Lloyds both told MPs that they had doubts about the Co-op bank's finances in December 2012. The deal fell through in April 2013.

"It was clear to us... that there was a shortfall of capital," António Horta-Osório, the chief executive of the Lloyds Banking Group, told MPs on the Treasury Select Committee.