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Virgin Money eyes Co-operative Bank

Virgin Money is looking to buy Co-operative Bank after reporting profits rose by a third in 2016.

Reuters reports that Virgin Money chief executive Jayne-Anne Gadhia wants to enter talks with the bank, which announced it was up for sale last month.

Gadhia said: “The bank has not approached anybody in Co-Op Bank yet,… but at some point we will look at this strategic opportunity.”

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Virgin Money did not specify if it wanted to buy the entire bank or select parts of it.

The bank wants to sell to increase its capital reserves to meet regulatory requirements.

A stock exchange announcement last month said: “The bank has always been clear that, although it meets its Pillar 1 regulatory capital requirements and expects to continue to do so, it needs to build its capital and meet longer term UK bank regulatory capital requirements.

“Its capacity to do so organically has been constrained by the impact of interest rates that are lower than previously forecast, reducing the bank’s ability to generate income, and by higher than anticipated transformation and conduct remediation costs.

“The Bank has also needed to consider enhanced regulatory capital requirements expected of all UK banks, including MREL requirements.”

The bank is also considering ways to raise equity capital, as well as a potential liability management exercise of its outstanding public debt.

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