Britain's Co-operative Group has said it has agreed a plan with the country's financial regulator to plug a capital shortfall of £1.5 billion (€1.77 billion) at its banking unit.
Co-op said it agreed a comprehensive plan to generate capital and provide stability for the Co-operative Bank.
It said the plan would generate £1 billion of new capital this year and £500 million in 2014.
Co-op said its core tier 1 ratio, a key measure of the bank's financial strength was expected to be above 9% by the end of 2013 and to increase in the following years.
"We have put in place a detailed and comprehensive solution to meet the current and longer-term capital requirements of the bank. In doing so we have agreed a plan to insure its future," said Chief Executive Euan Sutherland.
Co-op said the plan would involve an exchange offer to investors in the bank's subordinated capital securities, a capital commitment from the group, sourced from an issue of bonds and the transfer of an equity interest to bondholders.
Britain's financial regulator wants banks to achieve a core tier 1 ratio of at least 7% of their risk weighted assets.
It said in March banks must raise £25 billion of extra capital by the end of the year to absorb any future losses on loans.
The Prudential Regulation Authority said it would "hold the Co-operative to the delivery of its plans".
