Co-op bank in rescue talks

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

The bank said yesterday that discussions centred on a “prospective equity capital raise and liability management exercise”.

It added that talks were 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 was close to announcing a £700million deal that would see it dodge being wound down.

Yesterday’s statement said: “The bank notes recent media speculation and confirms that it is in advanced discussions with a group of existing investors with a view to a prospective equity

“The bank confirms it is in advanced discussions”

capital raise and liability management exercise.

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

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

The bank nearly collapsed in 2013 after the discovery of a £1.5billion black hole in its finances and it was forced into a painful debt-for-equity swap.

As a result, the lossmaking lender is now controlled by US hedge funds. Co-operative Group owns just 20% of the bank.