The review will look into the prudential regulation and supervision of the Co-operative Bank between 2008 and 2013, including the collapse of its bidding process to buy 632 bank branches from Lloyds Banking Group – known as ‘Project Verde’.

During this time, the bank suffered significant financial losses and barely survived complete collapse a year later.

John Glen, Economic Secretary to the Treasury announced the review and said it will aim to “understand what lessons can be learned”.

The Prudential Regulation Authority has appointed Mark Zelmer, who has over 30 years’ experience in financial services regulation, to carry out the independent review which is expected to run for a year.

Glen said: “We are committed to creating a stronger and safer banking system. A vital part of this is ensuring that our regulatory system can learn from past events. The launch of this independent review is a further demonstration of this commitment.”

In November 2013, the government announced it would direct the regulators to launch an independent review of the events at the Co-operative Bank and the circumstances surrounding them.

But at the time of the announcement, the government said it wouldn’t launch the review until it was clear it wouldn’t prejudice any actions the relevant authorities may take, including potential Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) enforcement investigations.

Given that the FCA has today banned former Co-operative Bank chairman, Paul Flowers, from the financial services industry, the independent review can now go ahead.

Flowers, who was chairman between April 2010 and 2013, was found to have sent sexually explicit messages and discussed illegal drugs using his work email account. He was also found to use his work phone to call premium rate numbers.

After stepping down, he was convicted for possession of illegal drugs.

The FCA found his conduct “demonstrated a lack of fitness and propriety required to work in financial services” and as such, banned him from the industry.

A Co-operative Bank spokesperson, said: “Today’s announcement relates to past events and historical issues running up to 2013. The investigation into the Bank itself was concluded and published back in 2015 and we are now focused on building a sustainable profitable bank for the future.”