op poised to unveil rescue plan 16 June 2013 Last updated at 15:29 The Co-operative Bank is understood to be close to a deal with regulators to tackle the hole in its balance sheet. An announcement between the bank and the Prudential Regulation Authority could come as soon as Monday, although the timetable may slip. Any rescue deal is unlikely to involve taxpayer money or affect savers, but it could affect up to 5,000 smaller investors. Concerns about the bank's capital arose after a deal with Lloyds collapsed. In April the Co-op cancelled a plan to buy 631 bank branches from Lloyds Banking Group. That was followed two weeks later by the ratings agency Moody's downgrading the bank's debt to junk status. The agency warned the bank may need "external support" if it could not strengthen its balance sheet. In response to Moody's, the Co-op said it had a "strong funding profile" that was "significantly above the regulatory requirements." But the bank admitted there was a "need to strengthen our capital position in light of the broader economic downturn and the pending introduction of enhanced regulatory requirements." It added: "We have a clear plan to drive this forward throughout the coming months." Most of Co-op Bank's problems stem from bad loans associated with its takeover of Britannia Building Society in 2009. Estimates vary on how big the shortfall is. The most extreme comes from Barclays Bank which recently suggested it could be around £1.8bn - a figure which the bank firmly denied. The Sunday Times says a large part of the cash to plug the hole is expected to come from bondholders - 5,000 of whom are smaller investors who lent money to the Co-op through securities called permanent interest bearing shares. The BBC's Joe Lynam says any agreement with Co-op would be the first test of the new city regulator, the Prudential Regulation Authority, since it assumed responsibility from the Financial Services Authority in April for regulating the banks. Part of its mandate is to ensure that the banks won't have to be bailed out from taxpayer money again. The Co-operative Group, parent of Co-op Bank, was founded in 1863. It has more than 6 million members and employs over 100,000 people.