UPDATE 1-Private equity approached about stake in Co-op bank - Sky News

Wed May 7, 2014 7:00pm EDT

(Adds information about Corsair's interest)

May 7 (Reuters) - Private equity firms, including Corsair Capital, were approached to take part in a 400 million pound ($678.62 million)rescue fundraising for the struggling Co-op Bank, according to Sky News and a source familiar with the matter.

However, the source said no serious discussions have occurred between Co-op Bank and Corsair about the private equity firm buying a stake in it.

Co-op Bank nearly collapsed last year after the discovery of a 1.5 billion pound hole in its balance sheet and had to be rescued by bondholders, a move that drastically reduced the stake of its former owner, Co-operative Group.

Sky News, which earlier reported the talks with Corsair, also said that Apollo Global Management had expressed an interest in Co-op Bank.

"In the next few business days we will make an announcement on the capital raise. Until then we are not making any formal announcements," a spokesman for Co-op Bank told Reuters.

The report came on the same day as a review of the Co-op Group by former director Paul Myners was published. The review said the organization should restructure its current 'manifestly dysfunctional' board and make it smaller with more members with business experience. ($1 = 0.5894 British Pounds) (Reporting by Tasim Zahid in Bangalore and Paritosh Bansal in New York; Editing by Alden Bentley and Dan Grebler)