Co-op chairman calls for urgent reforms after record £2.5bn loss

Co-operative interim chief executive Richard Pennycook
Co-operative interim chief executive Richard Pennycook
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THE co-op must make urgent changes, its chairman said yesterday, while acknowledging catastrophic management at its banking arm had put the entire group at risk.

The mutual announced it had lost a record £2.5bn, the bulk of which related to the discovery of a black hole in the Co-op Bank’s finances following its ill-fated purchase of the Britannia Building Society and attempts to buy more than 600 Lloyds branches.

Group chairman Ursula Lidbetter said: “During 2013, it became apparent that our governance had fallen far short of the standards to which we aspire as a co-operative society.

“Now is the time to put that right through fundamental reform. We have to act with urgency if we are to lay the foundations for a stronger, healthier co-operative business in the future.”

The Co-op’s debts, built up during an acquisition spree which included the Somerfield supermarket chain, stood at £1.4bn.

This was down from £1.7bn in 2012, but comes as lenders are reported to be increasingly troubled by a run of boardroom disputes over plans to shake up the group’s corporate structure.

Bitter resistance to the planned changes saw chief executive Euan Sutherland step down last month while former City Minister Lord Myners, architect of the reforms, will also leave after putting them to a members’ vote in May.

Ms Lidbetter said the “battle to save the bank” dominated activity last year since the discovery of a £1.5bn black hole, which had “risked not only its future but that of the entire group”.