Co-op Bank "needs a further £400 million"

Monday 24 March 2014

The Co-op's banking arm revealed a setback to its recovery today after admitting it needs to raise another £400 million to cover past issues.

The business, which is set to report full-year losses of up to £1.3 billion for 2013, said the matters relate to conduct and legal documentation, such as legacy PPI business and technical breaches of the Consumer Credit Act.

The Co-op Bank is now under the control of bondholders as part of last year's refinancing to fill a £1.5 billion hole in its balance sheet.

Today's update means the starting capital position of the bank for its four- to five-year recovery is weaker than in the rescue plan announced last year, requiring shareholders to inject another £400 million into the business.

Chief executive Niall Booker said: "The proposed capital raise would enable us to reset this starting point and continue with the execution of our original business plan."