The former boss of the Co-operative Group said it is a "tragedy" that its banking arm is to fall into the hands of US hedge funds, but refused to take the blame for its demise.
The customer-owned group yesterday revealed it will be left just 30% of the Co-operative Bank under a £1.5 billion restructuring, which will hand control of the ethical lender to owners of its bonds including US hedge funds, insurers and pension funds.
Peter Marks, who was chief executive of the funerals-to-supermarkets group from 2007 until this May, suggested the bank will be unable to retain its ethical ethos under its new owners. "It's not a co-op, is it?" he said.
But under testy cross-examination by MPs on the Treasury Select Committee, he said as only a non-executive director of the bank he was not predominantly responsible for the current crisis, adding it was not "Peter Marks PLC" or a "dictatorship".
"I cannot take responsibility for something I'm not in full control of, which was the bank," he said.
The Co-op is finalising a rescue plan for its banking arm which will avoid a taxpayer bailout but cede control to investors including US hedge funds Aurelius Capital Management and Silver Point Capital - prompting fears of a customer exodus.
Mr Marks said: "Hedge funds are there to maximise profit, that's what their sole purpose in life is. To be truly ethical you cannot do that.
"That does not mean the group cannot be ethical. Without the bank it can focus on its other businesses and be very ethical."
Mr Marks said losing control to powerful investors could be a "good thing" for the mutual, by allowing the Co-op Group to tighten its focus elsewhere.
"In many ways it could be seen as a good thing because in actual fact it will force the Co-op to focus on less and not stretch its capital," he added.
MPs, who are probing the collapse of the Co-op's deal to buy more than 600 branches from Lloyds Banking Group - dubbed Project Verde - expressed incredulity at parts of his evidence.
Conservative MP David Ruffley accused him of "selective amnesia" over his failure to remember Lloyds' warning over the Co-op's capital strength in December 2012. "I could have been aware of it but it's some time ago," he said.
Labour MP John Mann said: "You and others at the group were totally out of your depth in expanding the size of the Co-op so quickly and it's that attempt to grow so rapidly... which has led to this catastrophe."
But Mr Marks, who started his career stacking shelves, denied this.
Asked if the bank was an "innocent victim" from the financial crisis, Mr Marks said "yes".
He said regulators have "shifted the goalposts" on how much buffer capital the bank must hold to protect it from future crises, adding the Lloyds deal would have helped solve its capital problems.
He said its takeover of Britannia Building Society in 2009 - which has been blamed as the root of the bank's multi-million pound losses - was only a mistake in "hindsight", adding other executives were the driving force behind the merger.
"I think disastrous error is harsh but it certainly was an error," said Mr Marks. He added the Co-op relied on its accountants KPMG for due diligence on the deal.
However, Mr Marks said he repeatedly warned the group that it was trying to do too much - citing operations including supermarkets, car sales, insurance, banking and funerals - and said there was a "degree of inevitability" about the current crisis.
"I spent my life, 45 years, working for the Co-operative. I believe in its values and it's a tragedy what's happened for the group, for the movement and for me personally," he said.
The Co-op is expected to finalise details on its banking rescue plan in the coming days.
In a letter to the committee, former Co-operative Bank boss Neville Richardson admitted the loans acquired with the Britannia - which he ran before it was acquired by the Co-op in 2009 - were a "key factor" behind the bank's woes.
Mr Richardson was asked by committee members to submit further details after providing "apparently conflicting" evidence with Prudential Regulation Authority boss Andrew Bailey.
Mr Richardson told the cross-party group of MPs in September that the Britannia loans were not solely to blame for the financial troubles at the Co-op Bank, insisting the bad debts only accounted for a third of the bank's impairments.
But Mr Bailey wrote to the committee after his hearing insisting the Britannia assets had contributed a "significant proportion" - more than 75% - of the Co-op's losses and were the most vulnerable to stress.
In his follow-up letter to the committee, Mr Richardson said he stands by his original evidence but said he agreed with Mr Bailey that the Britannia loans were a "significant" or "key factor".
He also claimed that Mr Bailey based his calculations on a different total loan loss figure, adding that by using £1.6 billion as the overall impairment charge meant Britannia loans did only account for around a third.
Meanwhile, the Co-op Group's longstanding chairman Len Wardle is expected to leave the mutual imminently.
Mr Wardle, who became chairman of the customer-owned group in 2007, is expected to quit the mutual next year once the bank's capital restructuring is complete.
The Co-op is lining up a replacement, Sky News reported.