Britain's Co-operative Bank, which narrowly avoided collapse in 2013, has put itself up for sale in a bid to raise capital and meet regulatory requirements.

The lender said that it would be difficult to meet its capital requirements for future amid low interest rates and higher than expected restructuring costs.

Apart from the proposed divestiture, the lender is also considering options to raise equity capital from existing and new capital providers, and a potential ‘liability management exercise’ of its outstanding public debt.

Co-operative 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."

The bank almost collapsed in 2013 after discovering a £1.5bn hole in its capital following losses from real estate loans. It was rescued at that time by bondholders, who took control of the bank and left the Co-operative Group holding with only a 20% stake.

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As part of its recovery strategy, the bank has since 2014 reduced its cost base by over 20%, offloaded over half of the original non-core portfolio, and made critical IT upgrades.