The Co-operative Group is to lose overall control of its banking arm amid a funding struggle, Sky sources have confirmed.
The Co-op will be left with only a 30% stake in the bank, according to Sky News City Editor Mark Kleinman.
An announcement is expected to confirm the deal next Monday, with City investors and bondholders filling the funding shortfall.
The growing likelihood of the self-styled ethical lender being controlled by predatory US hedge funds and blue-chip investors such as pension funds and insurers has triggered warnings over the bank's future ethos.
Meanwhile, the bank has confirmed a suspension of listing and trading on the London Stock Exchange of its subordinated debt securities.
"The group has stated that constructive engagement with bondholders is continuing and that Group remains confident that a proposal to recapitalise the bank can be agreed and put to bondholders," it said in a statement.
"The bank expects to request the suspension of the relevant securities to be lifted at the time that full details of a recapitalisation plan are announced."
The Co-op banking division operates as a mutual concept and currently has 4.7m customers. It includes an insurance arm for home, motor and pet cover.
On June 17 the bank, which was founded in 1872, announced it needed to raise £1.5bn to plug the capital black hole.
The bank now admits it needs an additional £105m to deal with increased provision for payment protection insurance (PPI) and other product mis-selling claims, and "expects that many elements of any recapitalisation plan will be materially different".
The recapitalisation from outside the mutual comes after the Co-op previously set aside £269m to compensate customers mis-sold PPI.
The recalculated funding shortfall is due to more customers coming forward as well as the Financial Conduct Authority providing fresh guidance on appropriate levels of compensation for customers.
The sum also includes a compensation for mortgage customers affected by a newly-discovered flaw in which they were charged only interest on their first mortgage instalment - meaning further payments were higher than they should have been.
Customers who took out Platform and Optimum mortgage products would have been affected although the bank has not yet notified any of them and further details of the scale of the issue remain unclear.
The bank said the overall new provision of up to £105m also took into account "the identification of a technical breach of the Consumer Credit Act".
This was thought to relate to failing to inform some loan customers that they could reduce their outstanding balance.
The overall provision from the bank also includes money put aside because of overdue payments and unpaid cheques.
Co-op disclosed the figures as it prepares for its recapitalisation plan - which will mean it has to publish financial details to the stock market.
The attempt to plug the £1.5bn black hole in its balance sheet through a painful fundraising will force losses on to owners of its bonds and leave it with a stock market listing - ending its prized mutual status.
Hedge funds represented by investment banks had earlier demanded the bank tear up its rescue plan, instead proposing an alternative plan of converting all its bonds into shares, giving it a bigger stake in the lender.
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