The Chancellor made the bid in the early hours of the morning in May 2012, according to the Financial Times, despite earlier criticising other calls for exemptions.
Osborne aides told the newspaper the Chancellor remained unembarrassed about attempting to help a British institution secure the same treatment as other mutuals.
The revelation comes after the prime minister said Osborne would be pressing regulators to look into how disgraced former Co-op Bank chair Reverend Paul Flowers got his job.
Flowers resigned from the bank in June after the extent of the Co-op Bank’s capital troubles became clear. Shortly after giving evidence to MPs about the bank’s troubles, video and texts emerged indicating his use of ketamine and cocaine.
The proposed inquiry was revealed by David Cameron during Prime Minister’s Questions. He told MPs: “The Chancellor will be discussing with regulators what is the appropriate form of inquiry to get to the bottom of what went wrong here. There are clearly a lot of questions that have to be answered.
“Why was Rev Flowers judged suitable to be chairman of a bank? Why weren’t alarm bells ringing earlier, particularly by those who knew? It will be important in the coming days that if anyone does have information they stand up and provide it to the authorities.”
The prime minister said the Labour Party had close ties with the Co-op Group and its former chairman. Referring to Ed Miliband, he said: “We finally found a public inquiry he doesn’t want.”
Flowers was known to be a Labour Party supporter, although his membership has been suspended as a result of the scandal. The Co-operative Group also donated £50,000 to the shadow Chancellor’s office while Flowers was in office.
Responding during PMQs, Miliband questioned the prime minister’s decision to accept funding from supporters such as Icap boss Michael Spencer, whose firm was fined £55m for fixing Libor rates, and tax exiles.
Despite having little background in banking, Flowers gained approval from the Financial Services Authority to take on the role of Co-op Bank chair in 2010.
Reports have focused on the role of one FSA adviser whom the Co-op Bank later recruited as a non-executive director.
In his testimony to the Treasury Select Committee earlier this month, Flowers said politicians from all parties had encouraged the Co-op Bank to expand in the years following the financial crisis.
