An investigation has been launched into auditors for Wyelands Bank, owned by steel tycoon Sanjeev Gupta and closely linked to Greensill Capital, which went bust earlier this year.

The accounting regulator, the Financial Reporting Council (FRC), will investigate the role of Big Four accounting giant PwC in relation to its audit of the bank for the year ending April 30 2019, it said.

Wyelands Bank was forced by the Bank of England to repay all depositors £210 million due to concerns over how it was funding Mr Gupta’s GFG Alliance.

The watchdog has also opened an investigation into Saffery Champness over its audit of Greensill Capital, which has faced scrutiny over the roles played by its advisers including former prime minister David Cameron in lobbying the Government during the pandemic.

Wyelands is currently on the verge of collapse after Mr Gupta said he was pulling funding from the bank having handed them a £75 million loan in a year earlier.

Chief executive Stephen Rose has now been authorised to speak with potential new investors in an effort to preserve its future.

The board said that it expects the bank will be “wound up on a solvent basis” if it fails to secure a sale to new backers.

Wyelands’ most recent accounts for the year to April 2020 revealed that it plunged to a £63 million pre-tax loss after being hit with more than £61 million in impairments on loans.

A spokesperson for Saffery Champness said: “As professional accountants we owe a duty of confidentiality to present and former clients and, with this matter the subject of investigation, it would not be appropriate to comment at this time save to say that Saffery Champness will of course be cooperating fully with the FRC.

“Audit quality is an absolute priority for Saffery Champness and we are committed to upholding the high professional standards our clients rightly expect.”

A PwC spokesperson said: “It’s understandable that there is regulatory scrutiny in situations like this.

“We will cooperate fully with the FRC in its inquiries.

“We share the FRC’s commitment to audit quality and are two years into a wide-ranging programme to enhance audit quality across the firm.”