Co-op Bank dashes hopes of a rescue from an outside bidder

Hopes that an outside bidder could come in for the troubled Co-op Bank faded further today when the bank said it is in “advanced discussions” with existing investors about a rescue deal.

While other banks — Virgin Money or CYBG are thought most likely — remain interested in some parts of the Co-op Bank, there is now no serious chance of a full takeover.

That leaves the US hedge funds that own 80% of the bank, Blue Mountain Capital Management, Cyrus Capital Partners, GoldenTree Asset Management and Silver Point, to structure a rescue. The Co-op Bank said it is in “advanced discussions with a group of existing investors with a view to a prospective equity capital raise and liability management exercise”.

A further complication is the pension scheme the Bank shares with the wider Co-op Group, a 20% shareholder.

The Co-op Group wants an injection of cash from the Bank into the fund to protect members. A support package of £200 million has been mooted, but is not regarded as sufficient.