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| Regulators launch investigations into Co-op Bank's £1.5bn capital shortfall | Regulators launch investigations into Co-op Bank's £1.5bn capital shortfall |
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| Two investigations into the events leading up to the £1.5bn bailout of the Co-operative Bank and the role of its former senior managers in the institution's troubles are being conducted by the Bank of England and the City regulator. | |
| The much-anticipated investigations, which could result in former top bankers being fined or banned from the industry if found to have breached the rules, are taking place after the bank developed a £1.5bn capital hole and was rescued by bondholders – including US hedge funds. As a result the Co-operative Group of supermarkets, funeral homes and pharmacies was forced to cede control of the once-mutually owned bank. | The much-anticipated investigations, which could result in former top bankers being fined or banned from the industry if found to have breached the rules, are taking place after the bank developed a £1.5bn capital hole and was rescued by bondholders – including US hedge funds. As a result the Co-operative Group of supermarkets, funeral homes and pharmacies was forced to cede control of the once-mutually owned bank. |
| The instigation of the enforcement investigation by the Bank of England's regulatory arm, the Prudential Regulation Authority, means that an independent investigation commissioned by George Osborne will be delayed until the regulatory body has completed its work, which could take months. | The instigation of the enforcement investigation by the Bank of England's regulatory arm, the Prudential Regulation Authority, means that an independent investigation commissioned by George Osborne will be delayed until the regulatory body has completed its work, which could take months. |
| The Financial Conduct Authority, the other regulator of banks, has said it will also conduct its own enforcement investigation into the Co-op and the events leading up to the capital shortfall being announced in June 2013. | The Financial Conduct Authority, the other regulator of banks, has said it will also conduct its own enforcement investigation into the Co-op and the events leading up to the capital shortfall being announced in June 2013. |
| 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. The Treasury has previously indicated that the independent review announced by the chancellor will not start until it is clear that it will not prejudice any actions that the regulators may take. The PRA will work with the Treasury to ensure that the enforcement investigation and the independent review are sequenced appropriately." | 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. The Treasury has previously indicated that the independent review announced by the chancellor will not start until it is clear that it will not prejudice any actions that the regulators may take. The PRA will work with the Treasury to ensure that the enforcement investigation and the independent review are sequenced appropriately." |
| The Co-op Group now owns just 70% of its bank – which had prided itself on its ethical approach to business – as a result of the capital shortfall identified by the PRA last year, which has also sparked a political row about whether the coalition encouraged the aborted attempt to buy 631 branches from Lloyds Banking Group and whether the previous Labour government had championed Co-op's merger with Britannia Building Society in 2009. | The Co-op Group now owns just 70% of its bank – which had prided itself on its ethical approach to business – as a result of the capital shortfall identified by the PRA last year, which has also sparked a political row about whether the coalition encouraged the aborted attempt to buy 631 branches from Lloyds Banking Group and whether the previous Labour government had championed Co-op's merger with Britannia Building Society in 2009. |
| It has also sparked concerns about the way the mutual Co-op Group is governed and last month Lord Myners, the former City minister and one-time chairman of Guardian Media Group, was appointed to overhaul the structure of the country's biggest mutual. | It has also sparked concerns about the way the mutual Co-op Group is governed and last month Lord Myners, the former City minister and one-time chairman of Guardian Media Group, was appointed to overhaul the structure of the country's biggest mutual. |
| The announcement by the PRA came as top regulator Clive Adamson, director of supervision at the FCA, prepares to appear before the Treasury select committee of MPs on Tuesday to discuss the role of regulators in the ill-fated attempt by Co-op to take control of branches being sold by Lloyds under the codename Verde. | The announcement by the PRA came as top regulator Clive Adamson, director of supervision at the FCA, prepares to appear before the Treasury select committee of MPs on Tuesday to discuss the role of regulators in the ill-fated attempt by Co-op to take control of branches being sold by Lloyds under the codename Verde. |
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