Bank regulator to open Co-op probe

Updated: 

High Street Banks - Stock

The Co-operative Bank is to be the subject of an enforcement investigation by the Bank of England's Prudential Regulation Authority (PRA).

The regulator said the probe would "consider the role of former senior managers" at the lender, which underwent a rescue last year after a £1.5 billion black hole was discovered in its finances.

The shortfall was widely attributed to problems arising from the takeover of the Britannia building society and the failed bid to acquire more than 600 branches from Lloyds.

Questions about the management of the bank were also raised following drug revelations surrounding former bank chairman Paul Flowers.

The Financial Conduct Authority said it was also undertaking enforcement investigations into the bank, looking at "decisions and events up to June 2013".

The PRA said no further details of its probe would be published until it had reached its conclusions.

A separate review announced by Chancellor George Osborne will not begin "until it is clear that it will not prejudice any actions that the regulators may take". The PRA indicated it would co-ordinate the timings of the separate probes with the Treasury.

It is the latest round of scrutiny to be faced by the bank and the wider Co-op group, and the first formal confirmation of official regulatory probes.