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Co-op bank admits it needs another £400 million

The Co-op's banking arm has revealed a further setback to its recovery and has admitted it needs to raise another £400 million to cover past issues.

The business, which is set to report full-year losses of up to £1.3 billion for 2013, said the matters relate to conduct and legal documentation, such as legacy PPI business and technical breaches of the Consumer Credit Act.

Co-operative bank branch sign. Credit: John Stillwell/PA Wire/Press Association Images

The Co-op Bank is now under the control of bondholders as part of last year's refinancing to fill a £1.5 billion hole in its balance sheet.

The update means the starting capital position of the bank for its four- to five-year recovery is weaker than in the rescue plan announced last year, requiring shareholders to inject another £400 million into the business.