Sale sign up over Co-op Bank’s door

The board of the Co-operative Bank has hoisted a for sale sign over the troubled lender as concerns mount over its capital position.

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

As a result, and following an annual planning review, offers are now being invited for the bank.

“The board is commencing a sale process, something always considered a potential outcome of the turnaround plan, alongside considering other options to build capital and meet the longer-term capital requirements applicable to all UK banks,” the bank said in a statement.

Last week the Co-operative Group, which owns 20% of the bank, said chief executive Richard Pennycook was to step down.

The move, which will see food boss Steve Murrells taking over the helm, was accompanied by comments by chairman Allan Leighton that the group could pump more money into the lender.

Bank CEO Liam Coleman explained the lender had strong growth potential.

“While our plan has been impacted by lower-for-longer interest rates, the costs associated with the sheer scale of the transformation and the legacy issues we faced in 2013, there is considerable potential to build the bank’s retail franchise further using the strength of the brand, its reputation for strong customer service and distinctive ethical position,” Mr Coleman added.

The bank said it is also considering options other than a sale to build capital, including raising cash from new and existing investors.

The Co-op Bank almost collapsed in 2013 and was forced into a painful debtfor-equity swap.

The loss making lender is now majority controlled by hedge funds.

A spokesman for the Bank of England’s Prudential Regulation Authority welcomed the move.

“We will continue to assess the bank’s progress in building greater financial resilience over the coming months,” the group said in a statement.

Picture: PA. The Co-operative Bank has been under pressure since its near collapse in 2013.