The Co-op Group has confirmed it is to lose majority ownership of its banking arm amid a recapitalisation struggle.
In June, the bank announced it needed to raise £1.5bn to plug a capital shortfall.
The bank now admits it needs an additional £105m to deal with increased provision for payment protection insurance (PPI) and other product mis-selling claims.
The recapitalisation from outside the mutual comes after the Co-op previously set aside £269m to compensate customers mis-sold PPI.
Sky sources say a deal is expected shortly.
The recalculated funding shortfall is due to more customers coming forward as well as the Financial Conduct Authority providing fresh guidance on appropriate levels of compensation for customers.
The sum also includes a compensation for mortgage customers affected by a newly-discovered flaw in which they were charged only interest on their first mortgage instalment - meaning further payments were higher than they should have been.
Customers who took out Platform and Optimum mortgage products would have been affected although the bank has not yet notified any of them and further details of the scale of the issue remain unclear.
The bank said the overall new provision of up to £105m also took into account "the identification of a technical breach of the Consumer Credit Act".
This was thought to relate to failing to inform some loan customers that they could reduce their outstanding balance.
The overall provision from the bank also includes money put aside because of overdue payments and unpaid cheques.
Co-op disclosed the figures as it prepares for its recapitalisation plan - which will mean it has to publish financial details to the stock market.
The attempt to plug the £1.5bn black hole in its balance sheet through a painful fundraising will force losses on to owners of its bonds and leave it with a stock market listing - ending its prized mutual status.
Hedge funds represented by investment banks have demanded the bank tear up its rescue plan, instead proposing an alternative plan of converting all its bonds into shares, giving it a bigger stake in the lender.
The wider Co-op Group had insisted there is "no plan B" for saving the bank but now appears to have had to acquiesce to the demands.
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