Co-op Bank independent reviewer to be paid £1,500 a day
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The Canadian former central banker leading an independent review into the supervision and activities of the Co-operative Bank in the run-up to the revelation of its £1.5bn black hole will be paid £1,500 a day plus expenses, the Bank of England has revealed.
Mark Zelmer, an ex-Bank of Canada senior official who was named by the UK Treasury in March to lead the independent review into one of the City’s most notorious scandals of recent years, will be provided with all the documents he requires within the BoE’s possession, even those that are legally privileged or confidential, the BoE pledged on Tuesday. The BoE published the protocol for the review and an update provided to John Glen, the economic secretary to the Treasury.
Mr Zelmer has up to a year to complete his investigation, according to the Treasury’s March direction to the BoE’s Prudential Regulation Authority; an attempt to curtail similar lengthy investigations into the supervision of Northern Rock, Royal Bank of Scotland and HBOS. He can take longer to publish the report, however.
The Treasury announced in March that there should be an independent review into “the actions, policies and approach” of the Financial Services Authority, the old City regulator that was split in 2013, and the PRA “as the institutions with statutory responsibility for the prudential supervision of the Co-op Bank for the period 1 May 2008 to 22 November 2013” when the bank revealed a £1.5bn shortfall caused by bad loans.
The Treasury was able to announce the review in the wake of the banning in March of Paul Flowers, the bank’s former chairman, by the Financial Conduct Authority over his possession of illegal drugs and for phoning premium-rate sex chatlines on a company mobile. Mr Flowers, a former Methodist minister dubbed the “Crystal Methodist”, left the bank in 2013 and was convicted for illegal drugs possession a year later.
The independent review will focus on the period 2008-2013, and whether more stringent stress tests could have identified the bank’s loan impairments. It will also scrutinise why Co-op quit a bidding process for hundreds of Lloyds Banking Group branches in what was known as Project Verde.
Mr Zelmer will not be able to name regulators in his final report below the level of director. Anyone he criticises will have an opportunity to respond to criticism before publication, according to the protocol.
“While acknowledging the independent nature of Mr Zelmer’s review, the PRA remains accountable for delivery of the investigation and will continue to use its best endeavours to ensure that it is completed within the timescale set out in the direction,” Norval Bryson, a senior official at the PRA who will assist Mr Zelmer, wrote in a letter dated June 12 to Mr Glen.
Grant Thornton has also been appointed to help Mr Zelmer in his review.
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