The audit watchdog says it is “ascertaining the facts” on E&Y’s Repo transactions following criticism of the accountancy firm in a report published by Anton Valukas for the US bankruptcy court.
The report said E&Y failed to act over accounting methods which allowed the bank to remove about £33bn of troubled assets from its balance sheets.
The FRC will look at how the transactions were accounted for and audited in the UK.
It says: “We have asked Ernst & Young to provide further information in relation to what happened in the UK.”
An E&Y spokeswoman says: “Ernst & Young will cooperate fully with all relevant parties on this matter.”