The Co-operative Bank is to be the subject of an enforcement investigation by the Bank of England’s Prudential Regulation Authority (PRA).

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The regulator said the probe would “consider the role of former senior managers” at the lender, which underwent a rescue last year after a £1.5billion black hole was discovered in its finances.

The shortfall was widely attributed to problems arising from the takeover of the Britannia building society and the failed bid to acquire more than 600 branches from Lloyds. Questions about the management of the bank were also raised following drug revelations surrounding former bank chairman Paul Flowers. The Financial Conduct Authority said it was also undertaking enforcement investigations into the bank, looking at “decisions and events up to June 2013”. The PRA said no further details of its probe would be published until it reached its conclusions. A separate review announced by Chancellor George Osborne will not begin “until it is clear that it will not prejudice any actions that the regulators may take”.

The PRA indicated it would co-ordinate timings of the separate probes with the Treasury. It is the latest round of scrutiny to be faced by the bank and the wider Co-op group, and the first formal confirmation of official regulatory probes. It is understood that investigations will look into events as far back as 2006, with a wide range of penalties available should regulators find wrongdoing, including unlimited fines. Issues such as the capital shortfall and the level of due diligence ahead of the Britannia deal will come under scrutiny, as well as the timing of disclosures to markets and regulators about the problems the bank was facing. Individuals found responsible for breaches could be declared not fit and proper to hold positions in businesses regulated by the PRA – which oversees banks, building societies, insurers and other financial firms.

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