Chancellor George Osborne has announced that the Government will be launching an independent investigation to find out exactly what went on at the Co-operative Bank in the run-up to the discovery of its £1.5 billion capital shortfall as well as the appointment of former chairman Paul Flowers, who was arrested last week over drug allegations.
The beleaguered bank has found itself in the headlines for all the wrong reasons over the last few months.
In June the bank was found to be facing a capital shortfall of £1.5 billion, with the initial rescue plan to fill this hole rejected by the bank's investors and shareholders.
A second restructuring plan has since been announced, but this has yet to be voted on, and will see The Co-operative Group only retain a 30% share in the bank, with the remaining 70% going to investors and bondholders, a large majority of which are made up a consortium of hedge funds.
As part of this proposed deal, the bank's branch network will be cut by 15%, while there are also concerns that the bank risks losing its ethical and co-operative foundations.
But the bank has moved to reassure customers that this will not be the case, saying that its ethics and values will be written into its new guidelines going forwards.
Last week the bank again found itself in the spotlight after Flowers was filmed by the Mail on Sunday buying illegal drugs. Flowers has since been arrested by the police over the allegations.
The Financial Conduct Authority and Prudential Regulation Authority also confirmed today that they will be launching their own separate investigations into the Co-op Bank over the coming weeks.
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