Recent news has revealed that the Co-operative Bank will not be penalised for its actions between 2009 and 2013, but it is expected that fines and punishments are to be delivered to former management.
City AM explains that regulators believe that the bank’s actions warrant a fine of £120 million but the Bank of England’s prudential regulation authority (PRA) disagreed and felt like the fine would go against their own agenda to improve the soundness of the firm.
Banking analyst and chairman of the Financial Services Club Chris Skinner spoke to City AM about the decision not to proceed with the fine. “I can understand why the regulator has taken this route. They are on the operating table, still trying to be revived,” Skinner said.
The PRA and Financial Conduct Authority (FCA) also commented on the Co-op bank as having allowed “a culture which encouraged prioritising the short-term financial position of the firm at the cost of taking prudent and sustainable actions for the longer-term,” City AM reported.
Scandal has hit the Co-op bank hard, as in 2013, they attempted to recover from a drugs scandal involving chairman Paul Flowers, alongside many top executives and losses from commercial real estate loans. As well as this, bondholders took control of the bank and the owner was demoted to a minority holding.
While the FCA said that senior individuals at Co-op would continue to be investigated, Skinner added that he would be shocked if regulators did not fine or punish them in some way.
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