The boss of the British Business Bank (BBB) is being forced to reapply for the job amid a growing row over the state-owned lender’s role administering billions of pounds of fraudulent pandemic loans.

Sky News has learnt that Catherine Lewis La Torre, who has been interim chief executive of the BBB since September 2020, has notified colleagues that she plans to seek the role on a permanent basis.

The government is running a process to appoint a permanent successor to Keith Morgan, who was the institution’s inaugural CEO and ran it for about six years after its launch.

A deadline for applications has been set for early February, and Ms Lewis La Torre is said to be a strong contender for the post.

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However, bank executives said on Thursday that her candidacy could be complicated by the controversy which erupted this week when Lord Agnew resigned as a minister, berating the government’s approach to preventing fraud in the government’s COVID-19 loan schemes.

Lord Agnew expressed concerns that banks were not doing enough to address the issue and asked whether the BBB was holding them to account in order to protect taxpayers’ money.

Many people in the banking sector had assumed that Ms Lewis La Torre had already been appointed as the BBB’s permanent CEO because she has held the interim role for so long.

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Her biography on the BBB website makes no reference to the fact that her role is a temporary one.

The search for a permanent chief is being run by Ridgeway Partners, a firm of headhunters.

A British Business Bank spokesperson declined to comment on the CEO search but said in relation to Lord Agnew’s comments: “The British Business Bank stepped up to deliver the Bounce Back Loan Scheme on behalf of government to ensure access to finance was available at pace and at scale during the pandemic.

“The Bank ensured that key counter-fraud measures consistent with the self-certification design of the scheme were in place from the outset.”

The spokesperson cited a report by the National Audit Office which found that “most businesses have started to repay loans” and data published by the Department for Business, Energy and Industrial Strategy and the BBB “showing [that] the overwhelming majority of businesses are meeting their monthly repayments”.

The BBB was closely involved in the design of the Treasury’s various emergency loan schemes during the pandemic

It was unclear on Thursday who else was in the frame for the BBB chief’s role, which carries a basic annual salary of about £173,000.

Last year, Ms Lewis La Torre earned a total package worth £295,400.

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