As Co-op Bank stumbles from £1.5bn blackhole to possible sale, has it reached end of the road?

Britain's Co-op Bank said on Monday (13 February) that it is looking for a buyer, almost exactly three years since it revealed a £1.5bn ($1.9bn) black hole in its accounts.

The lender, which has over four million customers, is inviting offers to buy all of its shares, adding the sale was an option it had always considered as a "possible outcome" of its turnaround strategy.

In December 2013, the bank, which is 20% owned by the Co-Operative Group, was rescued by a number of US hedge funds, which rescued the lender and took control of a 70% stake in a so-called debt for equity swap.

The fallout from the scandal saw former chairman Paul Flowers step down in 2013, before pleading guilty to drug possession 12 months later.

Meanwhile, in January 2016, former chief executive Barry Tootell and former managing director Keith Alderson were banned by the Bank of England from holding senior positions in the industry.

While the bank said it made good progress following the bailout, cutting its cost by 20% within 12 months, it has failed to properly get back on its feet.

Last week, the Bank of England, said the bank, which in November announced it would cut an extra 200 jobs, taking the tally of job cuts to 2,700 over the last three years, said the Co-op Bank had been operating without the recommended shock absorbing capital.

That left the lender painfully short of options. The Co-op is expected to post another annual loss this year and the persistent low interest rates that have characterised the UK's economic landscape for the last eight years mean the lender, like its peers, has struggled to make a margin between what it pays its borrowers and what it charges its lenders.

The bank's inability to generate a profit has also made the option of owners pouring new capital into business highly unlikely. The Co-op Group has not ruled out the possibility of further investments, but given the bank's struggles, it would appear a risky choice.

In April last year, the lender reported its losses more than doubled in the last financial year as it faced the cost of dealing with higher misconduct charges. In the 12 months to 31 December 2015, the bank recorded an annual loss of £610m, compared with losses of £236m in the corresponding period in 2014, as conduct charges increased over the year by £92.5m to £193.7m after the bank had to set aside further provisions for payment protection insurance.

Group chief executive Niall Booker warned the group would face an uphill battle in 2016 and is expected to continue to post losses but insisted the bank's core operations were in better health than in the previous year.

Booker had come under intense scrutiny himself in May 2015, when it was announced he could be in line to pocket as much as £5m under a new pay deal.

He was not the only senior figure to be embroiled in controversy either as, in January 2016, former chief executive Barry Tootell and former managing director Keith Alderson were banned by the Bank of England from holding senior positions in the industry.