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The Co-Operative Bank is up for sale as part of its turnaround plan after warning last month that it would fail to meet its capital reserve targets over the next few years.

The Co-Op Bank said it is “also considering other options to build capital” and meet the longer term requirements of UK watchdogs.

The bank is kicking off the sale process, run by Bank of America Merrill Lynch and UBS, inviting offers for all of the issued ordinary share capital of the lender.

The lender said it is also considering ways to raise equity capital from existing and new investors, and a potential liability management exercise of its outstanding public debt.

Dennis Holt, chairman of the Co-Op Bank, said the board “has always been clear that we would need to build capital for the future”.

“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.”

The announcement comes as the bank concludes its annual planning review which has been submitted to regulators, and involves the measures to boost its capital reserves after flagging last month that its core tier one will likely fall and remain below 10 per cent “over the medium term”.

A spokesperson for the Prudential Regulation Authority, part of the Bank of England, said:

The PRA welcomes the actions announced today by the Co-operative bank. We will continue to assess the bank’s progress in building greater financial resilience over the coming months.

Copyright The Financial Times Limited 2019. All rights reserved.

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