Former The Co-operative Group CEO Peter Marks faced a grilling this morning from MPs investigating why the deal for the society’s bank to acquire 632 Lloyds Bank branches collapsed earlier this year.

The deal, dubbed Project Verde, fell apart in April, just three weeks before Marks was due to stand down as CEO after six years at the helm and 45 years working in the co-operative movement.

In May, it was revealed The Co-operative Bank had a capital shortfall of £1.5bn, promoting a new management team to put together a ‘bail in’ rescue package.

Speaking in front of the Treasury Select Committee, Marks described yesterday’s takeover of The Co-op Bank - in which the Co-op Group will hold a stake of just 30% and the remaining 70% owned by bondholders led by US hedge funds Aurelius and Silverpoint - as a “tragedy”.

“I think things have moved on but it is a tragedy,” he told the committee. “It could be a good thing, it will force the Co-op to focus on fewer businesses.”

He also said that the bank could no longer be described as a Co-op.

“Hedge funds exist to maximise profits, to be ethical you can’t do that,” he said when asked whether it would be possible to have an ethical hedge fund. “It’s not a Co-op, is it?”

Marks also said he wasn’t “accountable” because he “wasn’t approved by the FSA to run a bank”.

And he added: “Of course I acknowledge that Britannia has turned out to be not a good deal for the bank. I don’t accept that it was a mistake to give a lot of consideration to Project Verde, it would have transformed the bank and given a real competitor in the banking market. I think it was a project that was well worth pursuing.”

Meanwhile, the Co-op Group has announced that its chairman Len Wardle is to step down in May 2014. he has been chairman since 2007.

“The Co-operative is at its best when it is reforming and I want this change to continue,” Wardle said. “I want to persuade our members that The Co-operative Group should now look to an independent chair to lead the business, working side-by-side with the members who represent the movement.”