UK financial regulators Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA), a part of Bank of England, have begun a formal probe of Co-operative Bank, which was charged of £1.5bn capital hole in its finances in June 2013.

FCA said, "Investigation will look at the decisions and events up to June 2013."

Apart from Co-operative Bank’s capital, the PRA will look at issues related to liquidity positions, accounting methods and governance procedures as well as the role of the bank’s former senior managers.

Additionally, FCA will study the Co-operative Bank’s merger deal with Britannia building society and its terminated bids to purchase Lloyds Banking Group’s branches.

The investigations could result in heavy fines for Co-operative Bank and possible industry bans for some of its higher management personnel.

Co-operative Bank said it would work closely with regulators.

"The new management team is working hard to rectify the difficult and complex issues that they have inherited," Co-operative added.