The troubled Co-operative Bank is tapping up existing investors for cash as it continues to search for a suitor.
The lender said it was in “advanced discussions” with a group of investors over a capital raise.
The loss-making bank put itself up for sale in February, and it is understood that a Qatari conglomerate and a Swiss investment firm have hired Barclays to help them put together a bid.
The bank’s statement follows reports in The Times that it is set to announce a deal in the coming days that would see its hedge fund owners agree to a £700m bailout. Such a deal would prevent a wind down.
“The bank notes recent media speculation and confirms that is in advanced discussions with a group of existing investors with a view to a prospective equity capital raise and liability management exercise,” the Co-op said.
It added that it is continuing discussions over the separation of the Co-operative Pension Scheme (Pace), and said: “The formal sale process continues. The bank continues to fully discuss both the sale process and the capital raise options with the Prudential Regulation Authority (PRA), which has welcomed the sale and capital raise process.”
The Co-op Bank almost collapsed in 2013 after discovering a £1.5bn black hole in its finances but was rescued by a group of US hedge funds. Since then its management, now led by new chief executive Liam Coleman, have failed to turn its fortunes around.