Co-op Bank in ‘advanced’ talks over rescue package

Co-op Bank is in talks over a potential capital raise. Picture: Nick Ansell/PA Wire
Co-op Bank is in talks over a potential capital raise. Picture: Nick Ansell/PA Wire
Share this article
2
Have your say

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

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

It added that discussions are also ongoing regarding the separation of the Co-op Group pension scheme, which would clear the path for a takeover.

• READ MORE: Co-op Bank losses narrow as potential buyers circle

Reports had surfaced over the weekend that the struggling lender is close to announcing a £700 million deal that would see it dodge being wound down.

“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 capital raise and liability management exercise,” the lender said.

In March the bank, which has four million 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.

200 Voices: find out more about the people who have shaped Scotland

Co-op Bank almost collapsed in 2013 after the discovery of a £1.5 billion black hole in its finances and it was forced into a painful debt-for-equity swap. As a result, the loss-making lender is now majority controlled by US hedge funds. The Co-operative Group owns just 20 per cent of the bank.

The lender added: “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.”

Click here to ‘Like’ The Scotsman Business on Facebook