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Co-op Bank seeks to raise extra £400m

The Co-operative Bank is seeking to raise an additional £400m after discovering further legacy issues relating to missold payment protection insurance and interest rate swaps.

In an announcement this week, the bank says its capital position is weaker than previously thought after discoveries made in an ongoing review of its legacy operations, assets and liabilities.

The bank expects to make a pre-tax loss of between £1.2bn and £1.3bn for 2013 in full results published on or before 8 April.

Co-op Bank chief executive Niall Booker says: “The starting capital position of the bank for the four- to five-year recovery period is weaker than in the plan announced last year.”

The bank expects to report £400m in charges relating to conduct and legal documentation issues for 2013 and costs of £40m relating to the separation of the Co-op Bank from the Co-op Group.

The Co-op Bank had to be rescued last year after it was left with a £1.5bn capital shortfall. Many of its troubles stemmed from the merger with Britannia Building Society in 2009.

In November, it announced that a group of private investors would inject nearly £1bn into the bank in exchange for a 70 per cent ownership stake.

Jacksons Wealth Management managing director Pete Matthew says: “£400m is a lot of money and the whole thing looks like a catastrophic mess.”

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