Co-op Bank confirms takeover talks with 'several' suitors

Co-operative Bank has entered detailed talks with "several" suitors after receiving a number of takeover approaches in recent weeks, it said on Friday, and has also continued separate talks about raising new capital.

The loss-making bank, which announced the sale process in February, said it had received a number of non-binding proposals from fellow banks and investment groups and having since whittled this down, it has entered deeper discussions with these parties, with which it has shared more detailed information.

The bank said each of the preliminary offers selected included "some form of liability management exercise", where its outstanding debt would likely be swapped for equity in order to bring its financial ratios in line with regulatory guidance.

In parallel, the lender said it continued to talk to its existing investors and other potential newcomers about options to build capital.

Co-op Bank is just 20%-owned by the Co-op Group, having sold the rest to US hedge funds including Silver Point Capital and Perry Capital as part of an emergency bail-out four years ago.

In April last year the Co-op Group wrote down the value of its £333m investment in the bank to just £185m and then in October to just £140m, which suggested a value for the bank of around £750m.

At the end of last June, total lending stood at £19.6bn, deposits at £22bn and it had £1.4m worth of current account customers.

Co-op Bank meets the Bank of England's Pillar 1 capital requirement and liquidity obligations, but was in breach of individual capital guidance and combined buffer requirement.