Co-op execs face watchdog probe

Tim Wallace
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THE BOSSES who oversaw the Co-op Bank’s near collapse last summer are facing enforcement probes from the City’s regulators, the watchdogs said yesterday.

Former senior staff at the bank could face fines or bans from the financial sector if they are found to have behaved wrongly in the run up to the lender’s capital crisis.

Ex-chairman Reverend Paul Flowers will be among those investigated by the Financial Conduct Authority (FCA) and the Bank of England’s prudential regulation authority (PRA).

The FCA will probe what senior managers knew at each stage, and if any false or misleading statements were given to the markets.

Investors criticised the bank for claiming it had a relatively healthy capital position in spring 2013, before a PRA study found a £1.5bn capital hole months later.

As part of the plan to plug that gap the bank’s creditors took shares worth 70 per cent of the lender and took majority control from the Co-op Group.

The FCA will also look at the oversight powers used by non-executives including Flowers.

Meanwhile the PRA will study the bank’s capital position and the information the bank gave to regulators at the time.

The probes will look at the period up to summer 2013, and could go back as far as 2006 to the period before the Co-op Bank’s ill-fated merger with the Britannia Building Society.

Each will have to conclude before the Treasury investigates how the bank reached this position and how bossess like Flowers were appointed.

The probes could take a year or longer to comb through the evidence.

“This announcement was expected given the regulators’ announcement of 22 November and we continue to work closely with them,” said the Co-op Bank in a statement.