Struggling lender Co-operative Bank plc (LON:CPBB), which put itself up for sale last month, has revealed it will need to raise up to £750mln of additional core capital if its disposal plan fails.
The revelation came as the rescued bank reported a loss of £477mln for full-year 2016, albeit a reduction from the £610mln loss posted in 2015.
Co-op Bank has not made a profit since 2011 and has struggled to rebuild its capital position after being rescued from the brink of collapse by a group of hedge funds in 2013.
The bank – which has 4 mln customers - has blamed low interest rates and higher than expected costs in implementing its turnaround plan for its failure to meet capital targets set by The Bank of England's Prudential Regulation Authority.
The PRA last month said it welcomed the bank's decision to put itself up for sale as a possible solution to increasing its capital levels.
In today’s 2016 results statement, the lender’s chief executive Liam Coleman said: "We are pleased with the interest to date and engaging with potential bidders as planned."
But, the group said, if the sale process fails, its capital raising plan could include swapping debt for equity in the bank as well as raising around £300mln in new shares, as it seeks to meet long-term regulatory requirements.
If neither plan works, Co-Op Bank said it faces intervention by regulators including the possibility of being closed down.
Coleman also said the bank plans to close 10 branches in 2017, after shutting 59 last year, as it seeks to further slash costs.