Co-op Bank in talks over rescue package

Investment: Under pressure bank was placed on the market this year

The Co-operative Bank, which was put up for sale in February, is in advanced discussions with existing investors over a rescue package.

The bank said the talks centre on a “prospective equity capital raise and liability management exercise”.

It added discussions are also ongoing regarding the separation of the Co-op Group pension scheme, which would clear the path for a takeover. Reports had surfaced over the weekend that the struggling lender is close to announcing a £700 million deal that would see it avoid being wound down.

“The bank notes recent media speculation and confirms it is in advanced discussions with a group of existing investors with a view to a prospective equity capital raise and liability management exercise,” the lender said.

In March the bank, which has 4m customers, said its ability to meet longer-term UK bank regulatory capital requirements has been hampered by low interest rates and higher than anticipated transformation and “conduct remediation” costs.

Co-op Bank almost collapsed in 2013 after the discovery of a £1.5 billion black hole in its finances.

It was forced into a painful debt-forequity swap that left it under the majority control of US hedge funds.

The Co-operative Group owns 20% of the bank.

“The bank continues to fully discuss both the sale process and the capital raise options with the Prudential Regulation Authority (Pra), which has welcomed the sale and capital raise process,”the lender added.

The bank continues to fully discuss both the sale process and the capital raise options. CO-OPERATIVE BANK