Another banker fined, while the Co-op hires a cleaner

Former Treasury Minister Lord Myners has been appointed to the board of the Co-operative Group and will head up its review into how the troubled business is run. (Getty Images)

An embarrassing week for the British banking industry deepened yesterday as the troubled Co-operative Group called on a key player in the 2008 financial crisis to conduct a root-and-branch review – and a leading player in another bank meltdown was hit with a £30,000 fine.

The Co-op has brought in the political and City heavyweight Lord Myners – Labour's City minister at the time of the crisis – to review the way the business is run and sit on its board as senior non-executive director. He will chair a review of the 160-year-old group's governance and democracy and become the first outsider on the board.

His appointment follows the near-collapse of the Co-op Bank and its subsequent "bail-in", under which it will be 90 per cent owned by its bondholders. It also follows the resignation of the Co-op Group chairman Len Wardle and the arrest of the former Co-op Bank chairman Paul Flowers over drug allegations. It came as it emerged that insurer Legal & General had entered the fray for the Co-op's general insurance arm, appointing Goldman Sachs as an adviser.

Meanwhile Bradford & Bingley's former finance director, Christopher Willford, was fined over the lender's botched £400m rights issue in 2008. The Financial Conduct Authority (FCA) said he had failed to alert the board to potential risks such as details about profits, mortgage arrears and repossessions at the height of the credit crisis. B&B's mortgage book was eventually taken on by the state and its savings business sold to Santander.

The latest developments follow big fines for two taxpayer-backed banks, Lloyds and Royal Bank of Scotland, which will pay a total of £60m for mis-selling and sanctions busting. Co-op Bank was fined this year for PPI mis-selling.

Lord Myners said of the appointment: "I'm drawn to situations like this and I'm absolutely confident we can sort this out. The underlying business, the customer proposition, is absolutely tremendous. I'm doing it because the Co-op matters. It matters to me and it matters to its nine million members."

Lord Myners, who will be paid just £1 a year, said he considered the bank's problems, including a £1.5bn hole in its balance sheet, sorted out. "You can put a tick against that," he said.

George Osborne has ordered an independent inquiry into the bank and it faces probable probes by financial regulators. Separately, the Co-op has commissioned an independent "forensic" review into what went on at the bank.

That is expected to report around the same time as Lord Myners' governance review, in time for next May's annual meeting. Euan Sutherland, the new chief executive of Co-op Group, said: "What our customers, colleagues and wider membership base needs is an organisation and a business that they can be proud of again, and I believe that Paul [Myners] has a key role to play in helping us deliver that."

Mr Sutherland is due to present his own review of the Co-op's sprawling businesses early next year.

The FCA said B&B's Mr Willford had received information on 16 May 2008 that suggested B&B's financial outlook might be weaker than expected. He failed to raise this immediately with the board so that it could investigate and ensure that financial information provided to shareholders about the rights issue on 19 May was correct.

The information Mr Willford received showed that bad mortgage debts and repossessions had risen, while the difference between the rates B&B charged to, and received from, its customers had fallen. This could have led to a shortfall in profits, the FCA said.