It has been confirmed by the Prudential Regulation Authority that the Co-Operative Bank has a capital shortfall of £1.5bn. The bank plans to fill this hole primarily from a “bail-in”, whereby bond holders will be offered shares in the bank.
Group chief Euan Sutherland says the bank believes this is "the fairest and most equitable plan for all of those involved".
A Bank of England spokesperson said:
The PRA’s current assessment is that the Co-operative Bank needs to generate an additional £1.5bn in Common Equity Tier One capital in order to absorb potential losses over coming years. We will hold the Co-operative to the delivery of its plans. In relation to the Co-operative Bank this action will deliver the Financial Policy Committee’s recommendation to the PRA in March regarding the capital position of the banking system. The PRA will publish details on 20 June setting out the final conclusions of its capital exercise for all of the 8 major UK banks and building societies.