The Treasury has announced an inquiry into the near-collapse of the Co-op Bank following the arrest of its former chairman.
Chancellor George Osborne will use powers under last year's Financial Services Act to order the independent investigation into "events at the Co-op Bank and the circumstances surrounding them", the Treasury said.
The Treasury's review will cover "the appointment of senior staff" at the bank and examine events from at least 2008 - taking in the period covered by both the Labour and coalition governments.
City regulators the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have also announced they are considering whether to launch formal enforcement investigations into the bank.
Former chairman Paul Flowers was arrested by West Yorkshire Police officers in the Merseyside area on Thursday night and taken to a police station in the county.
The 63-year-old Methodist minister was suspended by both the church and the Labour Party following allegations that he bought and used illegal drugs.
The Treasury's investigation will not begin until it is clear that it will not prejudice any action that may be taken by the FCA and PRA.
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.
"It will cover the actions of relevant authorities (regulators and government) and the institution itself, including prudential issues, governance (including the appointment of senior staff) and acquisitions.
"The period that the investigation will review will start from at least 2008 and run to at least the present time."
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