Nov. 20 (Bloomberg) -- U.K. Chancellor George Osborne may order a probe into the Co-Operative Bank Plc after the chairman of its owner quit following a drug scandal.
Osborne will discuss “what is the appropriate form of inquiry to get to the bottom of what went on here,” with regulators, Prime Minister David Cameron told lawmakers in Parliament today.
Co-Operative Group Ltd. Chairman Len Wardle, 69, resigned yesterday after leading the board that appointed Paul Flowers as chairman of its lending unit. Co-Op Group is reviewing its governance structure after the Mail on Sunday reported on Nov. 17 Flowers had bought illegal drugs in Leeds, northern England.
Under the 2012 Financial Services Act, the chancellor has the power to order an independent inquiry if he wants it to look at areas wider than those that would be covered by a single regulator.
Regulators pressed Co-Op Group, which has businesses ranging from supermarkets to funeral parlors, to close a capital shortfall at the bank following the failure of its bid for more than 600 branches owned by Lloyds Banking Group Plc earlier this year. Co-Op Group last month ceded control of the bank as part of a plan to fill the capital hole.
-- Editor: Jon Menon