The Co-operative Bank is to face two separate investigations into its near-collapse, which will be carried out by two of the UK’s financial regulators.
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) are to each launch separate inquiries into the conduct of individuals within the bank, as well as why and how the mutual was allowed to come to near-collapse in 2013.
In a statement, the PRA said it was “undertaking an enforcement investigation in relation to the Co-operative Bank and as part of that investigation will consider the role of former senior managers”.
Questions have remained over the management of the bank after its former chairman Paul Flowers was filmed buying drugs last year. The chancellor of the exchequer George Osborne ordered an inquiry into the appointment of Flowers, but the Bank of England has said that this will not go ahead until both enforcement investigations have concluded, so as not to “prejudice any actions that the regulators may take”.
Flowers, who was also suspended from his role as a minister of the Methodist church following the allegations, gave evidence before a committee of MPs, saying that the bank was given “winks and nods” to expand in the wake of the financial crisis.
The Co-op expansion however, which included its acquisition of the Britannia Building Society, led to a £1.5 billion black hole on its balance sheet.
The bank has also launched its own governance review and recently appointed Lord Myners, former City minister, to head up the proceedings.
Both the FCA and the PRA have the power to fine the Co-op if they feel that it has behaved recklessly. They can even bar individuals from working within the banking industry altogether.