Co-op Bank lists itself for sale in order to raise capital
The Co-operative Bank, which is 20% owned by the wider Co-op Group, has put itself up for sale in order to meet its capital requirements.
The struggling lender has been in the process of implementing a turnaround plan after coming to the brink of collapse in 2013.
The bank's balance sheet ballooned following a disastrous merger with the Britannia Building Society, and then ran into trouble when it tried to buy more than 600 branches from Lloyds Banking Group.
In response to the black hole in the bank's balance sheet, the wider Co-op Group was forced to surrender control of the company when a £1.5bn capital-raising brought in a group of US hedge funds as shareholders in the lender.
The Co-operative Group still owns a 20% stake in the Co-op Bank.
In a statement released on Monday morning the bank's chairman Dennis Holt said that, while it had meet its capital requirements "continuously since 2014" and expected to be able to do so, it has always been clear that freeing up more capital was an important part of the organisation's future plans.
"Since we began work on the Bank's turnaround, the Board has always been clear that we would need to build capital for the future," he said.
"We are now commencing a sale process, alongside other options. The Bank's ethical heritage and customer proposition will be a central consideration in this."
Following the financial crash of 2008, new rules were put in place which required banks to have a certain amount of money available to them at all times, known as their "capital requirement".
Regulators say this will lessen the impact of any future financial crashes or worldwide recessions as banks will be able to access enough money to prevent them from going under.
Regular stress tests were put in place by the Bank of England in order to test each bank on how well it would fare in various doom scenarios.
The Prudential Regulation Authority, which was set up to supervise the banks, welcomed the news and said it would "continue to assess the bank's progress in building greater financial resilience over the coming months".