Co-op Bank uncovers £400m capital hole

The Co-operative Bank has revealed it must raise £400m via a new share issue after discovering additional costs related to PPI mis-selling.

The bank said the £400m costs include legacy PPI business, mortgage product first payments, interest rate swaps, third party insurance and technical breaches of the Consumer Credit Act. As a consequence, it expects to post a loss of £1.2bn-£1.3bn for 2013 and is starting its four- to five-year recovery phase from a weaker capital position than expected.  Chief executive Niall Booker said the firm faces "significant challenges" as the new executive team's review of the business has unearthed a number of issues. "The proposed capital raise would enable us to reset this starting point...