Co-operative Bank warns on regulatory action from FRC and PRA

Emma Haslett
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The regulators began their investigation after the Co-op revealed a sizeable capital shortfall in 2014 (Source: Getty)

The Co-operative Bank warned today that UK regulators are likely to "make findings against" following an 18-month investigation.

Read more: Co-op Bank says it is on track to meet Bank of England targets

The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have indicated they are likely to "commence formal settlement discussions" in July, the bank said.

"The outcome of any settlement discussions is currently uncertain both in the details of any findings and any potential financial penalty," it said. There's also been no indication of the scale of a potential fine.

Niall Booker, the bank's chief executive, said it had been "co-operating fully with the regulatory authorities".

"The risks of any adverse findings and penalties relating to these past events have been highlighted on multiple occasions previously," he added

"We will provide a further update as and when appropriate."

Following a dismal performance at the Treasury Select Committee by former chairman Paul Flowers, the bank revealed a £1.5bn capital shortfall in 2013, triggering a series of events which caused it to cut 14 per cent of its workforce.

When they announced their investigations in 2014, the PRA said it was looking into the role of former senior managers, while the FCA said it was looking into the Co-op's merger with Britannia Building Society.

In a 150-page report, Sir Christopher Kelly said the merger should "never have happened".

"Both organisations had problems. Bringing them together exacerbated those problems. It might have worked if the merged organisation had received first class leadership. Sadly it did not," wrote Kelly.

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