According to a report from Sky News, the four US-based hedge funds met the regulator last week to argue that the bank needs less capital investment than it had previously declared.
Over the last few weeks both TSB and Virgin Money have pulled out of the running to takeover the bank, with a deal involving the group of bondholders becoming the favoured approach.
The report noted that the group of bondholders also owned Co-op Bank’s shares and that formalising a deal could take several weeks, with the investors hoping to substantially cut the estimated £300m required.
As Mortgage Solutions reported in March, the bank posted a pre-tax loss of £477.1m in 2016, against £610.6m in 2015.
The results showed it was relying on a strong performance from its mortgage division to help turn around its fortunes.
The retail mortgage book grew by 5% to £14.1bn from £13.4bn in 2015, representing a 1.1% market share with £3.1bn of gross lending last year and is targeting annual increases of £1bn through its broker mortgage lender Platform.