Dividends axe to help fund Co-op rescue

The decision is part of a review of Britain’s biggest customer-owned business – which also runs supermarkets, travel agencies and funeral services – by new chief executive Euan Sutherland, and could lead to more businesses being sold.

Speaking at the group’s general meeting in Manchester, Co-op chairman Len Wardle said: “Our decision not to pay a half-year interim dividend was not one that was taken lightly. But it was viewed by the board as necessary given the challenges facing the group at this time.”

Co-op, which paid out £64m in dividends last year, will instead offer members discount vouchers.

“We still want to make sure that we give some form of recognition for the loyalty that our members have shown so far this year,” Mr Wardle said.

Some 99.8 percent of members backed plans to rescue the Co-operative Bank which will hand control of the division to investors including US vulture funds.

Co-op Bank hit trouble after racking up big losses on commercial property. Many of the bad loans were acquired through its takeover of the Britannia Building Society in 2009 and the bank’s management has subsequently been overhauled.