George Osborne, the Chancellor of the UK, has announced an independent investigation into the circumstances leading up to almost collapse of the Co-op Bank.

The investigation was announced as former chairman Paul Flowers continues to be held by the police in connection with a drug supply investigation. The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have also indicated that they are considering if to launch a formal enforcement investigations into the bank.

Mr. Flowers was arrested by theWest Yorkshire police officers in the Merseyside area on Thursday and has been taken to a police station in the county. The person who worked as Methodist minister was suspended from the church and the Labour party after it was revealed that he bought and used illegal drugs.

Osborne will utilise the authority under the Financial Services Act in order to launch the investigation into "events at the Co-op Bank and the circumstances surrounding them." The investigation will include appointment of senior staff at the bank and examine events from at least 2008.

A Treasury spokesman said, "The detailed direction that will order the independent investigation and set out its terms will take into account any issues arising, including from this potential FCA and PRA enforcement investigations, and be determined in consultation with the independent person appointed to lead it."