Accountancy firm KPMG is facing a probe into how it audited the Co-operative Bank’s books in the years leading up to its near collapse.

The Financial Reporting Council has launched an investigation after the discovery of a £1.5billion hole in the lender’s finances last year.

It will cover how accounts were prepared by the bank and reviewed by auditors, and is likely to go back to 2009 when the Co-op took over the Britannia Building Society.

The move came as the Co-op ditched plans to off-load its insurance arm, which had been put up for sale to raise money.

One of Britain’s newest banks has been backed by a hedge fund boss nicknamed the “Rottweiler”.

Martin Hughes’s Toscafund, along with another fund set up by Tory donor Sir Paul Ruddock, have pumped £40million into Aldermore Bank.

The bank was established in 2009 to target small business lending but has branched out into mortgages.

It now has 100,000 retail customers and more than £3.3billion of deposits, with lending reaching £3.4bn.

Aldermore chief Phillip Monks said: “The new funds provide us with the opportunity to do even more to champion Britain’s small businesses, the lifeblood of the economy.”

Opera-loving Hughes has an estimated £375m fortune and got his nickname from his aggressive investment style.

Toscafund is chaired by former Royal Bank of Scotland chief executive Sir George Matthewson.

Ruddock founded Lansdowne Partners in 1998 but announced plans to step down last year. (MIRROR.UK)