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Co-op bank expected to escape FCA and Bank of England fines Co-op bank expected to escape FCA and Bank of England fines
(35 minutes later)
The Co-operative Bank is expected to escape a hefty fine after a long-running investigation into its near collapse two years ago.The Co-operative Bank is expected to escape a hefty fine after a long-running investigation into its near collapse two years ago.
The bank was warned in June it could face penalties from the Financial Conduct Authority and the Bank of England, which are preparing to announce their findings on Tuesday.The bank was warned in June it could face penalties from the Financial Conduct Authority and the Bank of England, which are preparing to announce their findings on Tuesday.
At the time the bank said it would begin settlement talks with the two regulators in July, sparking expectations it could face a fine for the events that led to it needing an emergency cash injection in 2013. As a result of the cash call, the Co-op Group’s stake in its once important banking arm fell to 20% after hedge funds stepped in to fill the funding void. At the time, the bank said it would begin settlement talks with the two regulators in July, sparking expectations it could face a fine for the events that led to it needing an emergency cash injection in 2013. As a result of the cash call, the Co-op Group’s stake in its once important banking arm fell to 20% after hedge funds stepped in to fill the funding void.
Sky News has reported that the regulators have concluded a large fine could undermine the capital position of the Co-op bank. The bank, the Bank of England and the FCA refused to comment.Sky News has reported that the regulators have concluded a large fine could undermine the capital position of the Co-op bank. The bank, the Bank of England and the FCA refused to comment.
In June, the bank said: “The FCA and PRA [Prudential Regulation Authority] have indicated that their preliminary view is they are minded to make findings against the bank covering certain decisions, events and processes over the period from mid-2008 to end-2013. Based on their current view, the FCA and PRA have indicated they intend to commence formal settlement discussions in July 2015.”In June, the bank said: “The FCA and PRA [Prudential Regulation Authority] have indicated that their preliminary view is they are minded to make findings against the bank covering certain decisions, events and processes over the period from mid-2008 to end-2013. Based on their current view, the FCA and PRA have indicated they intend to commence formal settlement discussions in July 2015.”
The regulators have powers to fine, reprimand and ban firms and individuals, although the Bank of England’s PRA has rarely used its powers. The first bank to be fined by the PRA was the Royal Bank of Scotland in November for its IT failures in June 2012. The regulators have powers to fine, reprimand and ban firms and individuals, although the Bank of England’s PRA has rarely used its powers. The first bank to be fined by the PRA was the Royal Bank of Scotland, in November for its IT failures in June 2012.
The near collapse of the Co-op bank unleashed a row about the way it had been regulated and hit a political nerve about the role of the major parties in promoting co-operatives, with the bank seen as having had the backing of politicians to expand. The government has promised an independent inquiry.The near collapse of the Co-op bank unleashed a row about the way it had been regulated and hit a political nerve about the role of the major parties in promoting co-operatives, with the bank seen as having had the backing of politicians to expand. The government has promised an independent inquiry.
There was also scrutiny of those at the top of the bank at the time of the debacle, particularly of Paul Flowers, who was the chairman and a methodist minister. Flowers was unable to tell the Treasury select committee the size of the bank’s balance sheet and later pleaded guilty to possession of cocaine, crystal meth and ketamine at Leeds magistrates court after an exposé by the Mail on Sunday.There was also scrutiny of those at the top of the bank at the time of the debacle, particularly of Paul Flowers, who was the chairman and a methodist minister. Flowers was unable to tell the Treasury select committee the size of the bank’s balance sheet and later pleaded guilty to possession of cocaine, crystal meth and ketamine at Leeds magistrates court after an exposé by the Mail on Sunday.