The Group lost £559 in the six months to June. The bad loans relate mostly to Britannia Building Society, which merged with Co-op Bank in 2009.

In the six months to June it wrote off £496m of bad mortgages which mainly came with that deal.

The Co-op Group’s food and other businesses reported profits which offset the loss a little.

The bank has faced pressure from regulators to strengthen its balance sheet after revealing earlier this year it had a £1.5bn capital shortfall, and is planning on disposing assets and tapping bond holders to plug the gap. However, its situation is perilous, as the bank’s chairman Richard Pym identified.

He said both the Co-operative Group and holders of the bank’s subordinated capital securities will contribute broadly equal amounts to generate £1bn of the total additional £1.5bn core capital required to secure the Bank’s future.

“In addition, in 2014, contingent on a successful exchange offer, the Co-operative Group will contribute up to a further £0.5bn expected to be funded primarily through the sale of its insurance businesses. The execution of the Exchange Offer is vital to stabilising the Bank’s capital position; indeed, we will not remain a going concern without it.”

He said the group expects to announce further details in the fourth quarter.