KPMG told former Co-op Bank chief to 'tone down' report on lender's financial health He said: "What was left were references to the liquidity position of the bank and the core bank being the strong areas of the bank." The Co-op has commissioned former Treasury official Sir Christopher Kelly to produce a report into the circumstances surrounding the discovery of a £1.5bn hole in its banking arm's balance sheet and it is likely this will include reviewing past statements made by the lender's former management team. Mr Tootell resigned as chief executive of the Co-op Bank in May hours after the seven-notch downgrade of the lender's debt to "junk" status by analysts at Moody's. As the Co-op's auditor, KPMG has come in for criticism for failing to spot the problems in the bank earlier, as well as signing off the lender's disastrous merger with the Britannia Building Society, which is blamed for much of the lender's problem. Mr Walker defended his firm's dealings with the Co-op and said the due-diligence report it produced for the mutual on the Britannia deal was a "thorough piece of work." KPMG was paid a total of £1.3m by the Co-op for its work on the Britannia merger, including £841,000 for its due-diligence report. At the same Treasury Committee hearing, bankers from JP Morgan defended their advisory work for Co-op on the Britannia deal for which the US investment bank earned £5m. Tim Wise, managing director UK investment banking at JP Morgan, said he "absolutely" stood by its work for the Co-op, though he admitted the assumptions underpinning the merger had not "stood the test of time." "You cannot be happy with the outcome and the way it has gone...we absolutely stand by what we did at the time," said Mr Wise. The Co-op Bank declined to comment.