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Regulator to investigate Co-op Bank’s £1.5bn capital hole
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The Prudential Regulation Authority is investigating the events leading up to the discovery of a
According to The Sunday Telegraph, the regulator is reviewing the actions taken by itself and its predecessor, the Financial Services Authority.
The inquiry will focus on whether the regulators missed anything and if the capital shortfall should have been acknowledged earlier. Investigators will look at letters, emails and telephone calls, as well as past assessment of the lender’s books.
The internal inquiry will also probe how the bank went from having a Tier One capital ratio of 9.2% at the end of 2012, to a capital shortfall in June.
While there are no plans to publish the inquiry, MPs on the Treasury Select Committee have been carrying out their own investigation into the collapse of the Co-op Bank bid for Lloyds’ TSB branches earlier this year.
The Bank of England, in which the Prudential Regulation Authority is based, declined to comment. PRA chief executive Andrew Bailey is understood to regularly hold private conversations with the select committee’s chair, Andrew Tyrie.
Last week, the Co-operative Group announced it would embark on a restructure which would give it a 30% stake in the Co-op Bank, with 70% given to hedge funds and other creditors.
Speaking the day after the announcement, former Co-op Group chief executive Peter Marks told MPs the move was a “tragedy” for the co-operative movement.