The government had a lot riding on the Co-operative Bank. When the coalition government came to power after the financial crisis, its ministers were keen to demonstrate that they could regenerate the battered British banking industry.

Senior Conservatives and Liberal Democrats wanted more competition in the sector. They wanted to unleash "challenger banks" that might take on the enormous, established providers that had got themselves, to varying degrees, into such a spectacular mess. They liked the sound of retail banks that had no truck with investment banking. The Co-op seemed to fit the bill.