Co-operative boss Richard Pennycook has admitted the group “let the co-operative movement down in a fairly significant way”.
Referring to two years of crisis involving a near-collapse and a Methodist minister caught up in a drugs scandal, chief executive Mr Pennycook said its troubles were shocking and disappointing.
Looking to the future though, he told the BBC he believes the movement’s founders would be happy at the steps being taken to rebuild its reputation.
“Over the last two years there’s been a very significant crisis that we had to work our way through. And I think in terms of any reflection of that recent past, everyone found that shocking and disappointing,” he told BBC Radio 5 Live.
“We let the co-operative movement down in a fairly significant way. After 150 proud years where the Co-op had a reputation for doing the right thing.
“But today as we look forward to rebuilding the movement I think the Rochdale Pioneers would be excited by the potential that we have to do that.”
Founded in 1872, the Co-op grew out of the Rochdale Society of Equitable Pioneers, who came together on a basis of political and religious neutrality with the aim of building a better society.
The bank nearly collapsed in 2013 and dragged the wider Co-operative group to a £2.5bn annual loss that year, after a £1.5bn hole was discovered in the lender’s balance sheet.
It had to be rescued in a deal which saw the group’s stake in the lender shrink from 100 per cent to 20 per cent as it ceded majority ownership to bondholders including US hedge funds.
There was further damage to the bank’s reputation after a drugs scandal involving former bank chairman Paul Flowers, and sharp criticism about how the Methodist minister was appointed to the role despite a lack of experience.
In his interview with the BBC Mr Pennycook also referred to “controversy” as the Co-op tries to move forward.
He said: “We’re going through the process of rebuilding our governance and we’ve had some controversy along the way as we do that.”
He added: “We’re building our governance from scratch.
“Our colleagues at the Midcounties this time last year were telling us they would oppose the governance reforms and then a few months later after good dialogue with them they supported them. That’s a healthy democratic dialogue which is the nature of the Co-op.”
He explained that three people had been shortlisted from 36 for three positions on the board.
He said: “I actually thought when we started that process in our first year we would be lucky to have one or two.
“Members still have a vote so they can decide whether to support or not support those three candidates and in the future if we have contested elections so much the better, but at this early stage of our governance it’s not bad progress.”