A new independent review into the prudential supervision of the Co-operative Bank between 2008 and 2013 has been announced by the Economic Secretary to the Treasury John Glen.
The news follows the announcement by the Financial Conduct Authority that it has concluded its enforcement investigations into the Co-op Bank and related individuals.
The period under review covers key events such as the withdrawal from the Project Verde deal to buy Lloyds branches in 2013, and aims to understand what lessons can be learned.
The inquiry will also look at the impact of IT on the Bank’s operations, specifically whether the regulator was made aware of the change in the accounting treatment of the cost of replacing its IT platform in 2010. And if it was, whether it should “have acted to postpone the effect of the IT programme on the Co-op Bank’s capital position”.
Mr Glen has approved the Prudential Regulation Authority’s (PRA) appointment of Mark Zelmer to carry out the review.
Mr Zelmer, who has over 30 years’ experience in financial services regulation and policy, is a former deputy superintendent of the Office of Superintendent of Financial Institutions, Canada, and previously a senior official at the Bank of Canada, International Monetary Fund, and representative on the Basel Committee on Banking Supervision and Financial Stability Board.
Mr Glen said: “We are committed to creating a stronger and safer banking system. A vital part of this is ensuring that our regulatory system can learn from past events. The launch of this independent review is a further demonstration of this commitment.
“The review will look at the actions, policies and approach of the Financial Services Authority, and latterly the PRA, as the institutions with statutory responsibility for the prudential supervision of the Co-op Bank during the period in question. It will focus on the outstanding questions identified by the House of Commons Treasury Committee (TSC) in its 2014 report on Project Verde.
“As recommended by the TSC, the review will have full access to all relevant documents and correspondence, including the record of government contacts concerning the Lloyds ‘Verde’ bidding process. A detailed Direction has been laid in Parliament to initiate the Review and set out its scope and parameters.”
