FSA cleared Britannia's balance sheet just months before Co-op merger As a result, it is likely that the committee could recall the Prudential Regulation Authority - which assumed supervisory regulation of UK banks from April 1 - to give evidence, or ask for written clarification. The revelation is interesting in light of The Sunday Telegraph's disclosure this weekend that the Bank of England's Prudential Regulation Authority is carrying out an internal inquiry in relation to its actions over the Co-op. In his evidence, Mr Tootell said that the shortfall - disclosed in June this year - was the result of worsening corporate loans inherited from Britannia, and continued payment protection insurance redress payments. Asked by Andy Love MP how reliant Co-op was on KPMG, Mr Tootell said: "We didn't make a decision based on KPMG. We took comfort from their input to us. KPMG has consistently pointed out that it did not, and was not asked to, carry out full due diligence of Britannia for Co-op. A spokesman for the auditor said: "KPMG conducted some due diligence ahead of the Britannia deal . We did not, however, undertake any due diligence on the corporate loan book. Our due diligence work did not include a recommendation on the merits of the Britannia deal. In his evidence to the committee over the Co-op's problems earlier this year, Andrew Bailey, head of the PRA, pointed to a rapid deterioration in 2012 and early 2013 of the Co-op's corporate assets. A PRA spokesman declined to comment in relation to Mr Tootell's assertion, however. Much of the two-hour-plus hearing focused on whether or not Co-op Bank was being truthful in March 2013 when it said in its accounts for the year to December 2012 that its capital position was strong. Committee chairman Andrew Tyrie pressed Mr Tootell, asking why such an opinion could have been put forward when three months later the capital hole was disclosed. Mr Tootell emphasised that the opinion was based as at December 2012, and said that forward capital guidance from the PRA was to blame. The key point there is that you were right up there already? You were sailing close to the wind, and when some demands were made of you [on capital], it was too much?," Mr Tyrie asked. "Indeed," Mr Tootell responded. Capital "was so tight that a puff of wind could have blown it over," Mr Tyrie suggested, but Mr Tootell re-emphasised that "it was adequate at 2012 year end." The former bank chief executive was accused of being "strategically forgetful" in an at times tense session before the House of Commons committee. His evidence follows on from that of former Co-op Group chief executive Peter Marks last week, and ahead of former bank chairman Rev. Paul Flowers, who will give evidence next Wednesday, November 6.