The Co-operative Bank has put itself is up for sale.

The bank, which almost collapsed in 2013, said a sale was “always considered a potential outcome of the turnaround plan, alongside considering other options to build capital and meet the longer term capital requirements applicable to all UK banks”.

Co-op Bank, which has around four million customers, warned in January its Tier 1 capital ratio would fall and remain below 10 per cent in the medium term and it was

The bank said meeting longer-term regulatory capital requirements has been hampered by lower than expected interest rates and higher than expected transformation and “conduct remediation” costs.

As a result, and following an annual planning review, the board is now “inviting offers” for all of the issued ordinary share capital as well as exploring options to raise capital from new and existing investors.

Chief executive Liam Coleman said: “While our plan has been impacted by lower for longer interest rates, the costs associated with the sheer scale of the transformation and the legacy issues we faced in 2013, there is considerable potential to build the bank's retail franchise further using the strength of the brand, its reputation for strong customer service and distinctive ethical position.”

Co-op Bank says it has “substantially addressed” a broad range of historic conduct issues, including payment protection insurance (PPI), but expects to post a “significant” loss for the 2016 year to December, though “less” than the £610m loss reported in 2015.

The bank said conduct and legal risk charges “reduced significantly over the course of the year”, and lower operating costs and a reduction in losses on asset sales, along with a gain on the sale of the Visa Europe share, “more than offset the reduction in net interest income and increase in the fair value amortisation associated with the merger with the Britannia Building Society”.

Co-op Bank almost collapsed in 2013 after a £1.5bn black hole was discovered in its balance sheet and was forced to accept a debt for equity swap which handed control to hedge funds.

A spokesman for the Bank of England's Prudential Regulation Authority 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.”

Co-op Bank chairman Dennis Holt said: “The bank has met its Pillar 1 regulatory capital requirements continuously since 2014 and expects to continue to do so.

“At the same time, since we began work on the bank's turnaround, 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.”

In a separate announcement, Co-op Bank has resolved “contractual differences” with outsourcing giant Capita.

Capita will continue to provide mortgage administration services and new mortgage application processing for Co-op Bank and its clients until December 2020 and “work on the IT system transformation will cease”.

The contract, which has an option to extend, secures 740 jobs in Plymouth, Leek and