A long-awaited inquiry into the near-collapse of the Co-operative Bank will be published this week, nearly five-and-a-half years after it was ordered by George Osborne.
Sky News has learnt that the Treasury plans to publish the probe – which was overseen by Mark Zelmer, a former official at the Canadian central bank and the International Monetary Fund – on Wednesday.
The review was commissioned by Mr Osborne while he was Chancellor, but detailed terms of reference were only outlined just over a year ago by John Glen, the City Minister.
A banking industry source said Mr Zelmer’s would “draw a line” under one of the most serious crises to hit the sector since the crash of 2008.
The seeds of the Co-op Bank’s troubles were sown in 2009 when it merged with the Britannia Building Society.
It almost collapsed in 2013 when it tried to buy more than 630 branches from Lloyds Banking Group, only to discover a £1.5bn hole in its finances that had to be plugged by a group of US hedge funds and the Co-op Group.
Subsequent investigations by the Treasury Select Committee and the City watchdog exposed a string of failings in management, corporate governance and regulatory supervision at the self-styled ethical lender.
Last year, Paul Flowers, the Co-op Bank’s former chairman, was banned from the financial services industry by the Financial Conduct Authority, while enforcement action by the Prudential Regulation Authority was delayed until after the outcome of Mr Zelmer’s review.
Banking sources said the Treasury had kept “a particularly tight lid” on the details of the Co-op Bank probe, including the timing of its publication.
They suggested, however, that allegations of political interference in the process of selecting the Co-op Bank as preferred bidder for the Lloyds branches were likely to be rejected.
The losing bidder in that auction – a vehicle populated by City grandees – has long alleged that the Government applied pressure to Lloyds to enable the Co-op Bank to expand by acquiring the business.
The Lloyds deal collapsed, leading to the creation of TSB as a standalone company.
Mr Zelmer’s review, which was set up to examine the prudential supervision of the Co-op Bank between 2008 and 2013, is likely to cite failings with some aspects of its regulation, although many have already been addressed through reforms to banking regulation during the ensuing period.
A number of other parties have already been punished over the Co-op Bank crisis.
The audit regulator banned Barry Tootell, the lender’s former chief executive and chief financial officer, from membership of the UK accountancy body for six years from October 2016.
It also ordered him to pay £20,000 towards the FRC’s costs.
KPMG, which audited the Co-op Bank, is braced for a £4m fine for its supervision of its 2009 accounts.
The Co-op Bank has now severed most of its ties with its former parent following a further restructuring in 2017 that saw the hedge funds pump in £700m to keep it afloat.
Now under new management, it is likely to be sold in the next two years.
The Treasury and PRA declined to comment on Tuesday.