The banker hired to carry out an independent review of the regulation of the Co-op Bank before its 2013 crisis will be paid £1,500 a day, the Prudential Regulation Authority (PRA) has revealed.
The appointment of Mark Zelmer – an ex-colleague of Bank of England Governor Mark Carney – was announced in March. His pay packet means he could earn around £400,000 in total if he takes the full year allowed him to complete his investigation.
It has been reported Mr Zelmer will conduct most of the investigation from Ottawa, Canada, supported by a team from Grant Thornton UK.
Mr Zelmer worked at the Bank of Canada when Mr Carney was its governor, but the PRA said in March: “After careful consideration, we concluded that any risk of a perceived conflict of interest in this regard is minor and manageable. We understand that the Treasury shares this view.
“We found no other issues around conflicts of interest and Mr Zelmer has confirmed that he himself is unaware of any.”
Mr Zelmer, who has also worked for the IMF, Canada’s banking regulator and the Basel Committee’s Banking Supervision and Financial Stability Board, will be given full access to Bank of England documents on Co-op Bank, even if they are legally privileged or confidential.
His probe will look at the “actions, policies and approach” of UK regulators responsible for the supervision of the Bank – including the PRA and the Financial Conduct Authority’s predecessor the Financial Services Authority (FSA) – between May 2008 and November 2013.
The period saw the Bank’s ill-fated takeover of Britannia Building Society and the aborted Cape Verde deal to buy 632 branches from Lloyds in 2013.
That year, the Bank nearly collapsed after a £1.5bn hole was found in its finances, sparking a rescue by hedge funds that saw the Co-op Group’s stake downgraded from 100% to 20%. The Group has since offloaded its remaining share.
The period under examination also saw disgraced Methodist minister Paul Flowers serve as chairman of the Bank, from 2010 to 2013, despite concerns over his lack of experience. Mr Flowers was later subject to scandal after allegations of illegal drug use and sexual impropriety, and was banned from the financial services industry by the FCA earlier this year.