Regulators to launch formal investigation into Co-op Bank and 'former senior managers'

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Regulators have begun an enforcement investigation in relation to the scandal-hit Co-operative Bank.

The Prudential Regulation Authority said in a statement the investigation would "consider the role of former senior managers" at the troubled lender.

Questions about the management of the Co-op were raised after the bank unveiled a £1.5 billion hole in its balance sheet last summer.

The crisis at the bank deepened after former chairman Paul Flowers was arrested over drug allegations in November last year.

The recapitalisation of the bank left the Co-op Group with a 30 per cent stake with the rest held largely by hedge funds.

"No further information will be provided on the investigation until the legal process has concluded and an outcome has been reached.

"The Treasury has previously indicated that the independent review announced by the chancellor will not start until it is clear that it will not prejudice any actions that the regulators may take. The PRA will work with the Treasury to ensure that the enforcement investigation and the independent review are sequenced appropriately."

The Co-op has brought in City heavyweight Lord Myners to review the way operations are run and sits on its board as senior independent director.

The Financial Conduct Authority also confirmed it will undertake an enforcement investigation into the Co-op, looking at the "decisions and events up to June 2013".

Read the full statement from the PRA here

Read the full statement from the FCA here