LONDON - The Co-operative Bank announced plans on Monday to raise an additional £1.5 billion, or $2.4 billion, to replenish a capital shortfall.
Under the terms of the deal, the British bank will ask junior bondholders to swap their existing debt for shares in the Co-operative Bank. The agreement represents the first time that a so-called ‘‘bail in’’ of bondholders has been used to recapitalize a British bank since the financial crisis began.
The move contrasts with previous efforts by local banks to raise new capital, which has included multibillion-dollar state bailouts of rival lenders like the Royal Bank of Scotland and Lloyds Banking Group.
By forcing bondholders to exchange their current debt securities for shares, Co-operative Bank is trying to avoid turning to the British government for financial help.
The lender, whose credit rating was downgraded to junk status by Moody’s Investor Services last month because of questions over its capital reserves, said the agreement would increase its so-called common Tier 1 equity ratio, a measure of a firm’s ability to weather financial shocks, to 9 percent by the end of the year.
The Prudential Regulatory Authority, a British regulator, has called for all of the country’s banks to have a common Tier 1 equity ratio of at least 7 percent by the end of the year under the accountancy rules known as Basel III.
British lenders must raise a combined £25 billion by the end of the year to meet the capital shortfall. Regulators will announce details on Thursday of how much each bank must raise by the end of the year.
The Co-operative Bank said on Monday that it planned to raise £1 billion through the bondholder bail-in this year, and increase its reserves by a further £500 million next year.
‘‘This announcement is good news for the Co-operative Group, the Co-operative Bank, its customers,’’ Euan Sutherland, chief executive of the Co-operative Group, the British conglomerate that owns the lender, said in a statement. ‘‘This solution, under which they investors own a significant minority stake in the Bank, will then allow them to share in the upside of the transformation of the bank.’’
As part of the capital raising, the Co-operative Bank also plans to sell its general insurance unit. Earlier this year, the lender sold its life insurance and asset management businesses to the British pension company Royal London for around £220 million.
The British lender’s financial difficulties stem from its mistimed acquisition of a local rival, Britannia Building Society, in 2009 that left the Co-operative Bank with a large pool of delinquent commercial real estate loans.
The Co-operative Bank also ran into trouble earlier this year when its plan to buy part of Lloyds Banking Group’s branch network collapsed. The move was an effort to increase its capital base, while also expanding across Britain to compete with larger lenders like Barclays and HSBC.
