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March 5 (Reuters) - CPP Group is in talks on a financial restructuring that could see its lenders swap their debt for a significant stake in the British credit card insurer following a multi-million pound regulatory fine, Sky News reported on Tuesday.
Under one scenario being negotiated, lenders Barclays, RBS and Santander UK would exchange debt for an undisclosed proportion of CPP shares, Sky News said on its website.
Another proposal would see founder Hamish Ogston, who already owns a 57 percent stake in CPP, inject new funds into the company and possibly emerge from the refinancing discussions with a larger stake, Sky News reported citing insiders.
Britain's Financial Services Authority fined CPP 10.5 million pounds ($15.88 million) in November after a probe into the way in which CPP sold protection against identity theft.
The banks and CPP have been talking about the restructuring for more than six months. Unless a solution can be found that ring-fences compensation for customers, the Financial Services Compensation Scheme would likely have to step in, Sky News reported.
The Financial Services Compensation Scheme can pay compensation to customers if a firm is unable to pay claims against it.
CPP could not be immediately reached for comment and declined to comment to Sky News.