CONCERNS about the financial health of the Co-operative’s banking arm are likely to loom large today when the group faces members at its AGM.
The meeting in Manchester will also see the departure of Bradford-born chief executive Peter Marks, who is retiring after more than 40 years in the co-operative movement. He has been at the helm during a period of rapid expansion for the group, including the acquisitions of Somerfield and Britannia Building Society.
He is being replaced by Euan Sutherland, former chief operating officer of B&Q owner Kingfisher, who has no formal experience in banking.
One of Mr Sutherland’s first tasks will be to inject confidence into the banking arm after the collapse of a deal to buy more than 600 Lloyds banking branches and a recent downgrade to junk status by ratings agency Moody’s.
The downgrade forced the Co-op to reassure customers on its finances, with the bank saying: “We haven’t sought, nor do we need, Government support.”
Mr Marks, who has run the member-owned group since 2007, drove its £1.6bn takeover of supermarket chain Somerfield in 2008 and the 2009 rescue of Britannia, then Britain’s second-biggest building society.
But the Britannia deal proved a step too far, with toxic commercial property and home loans it inherited dragging its banking arm to losses of £662m in 2012.
That pushed the group to statutory losses of £599m in 2012, from £373m profits a year earlier. Moody’s said the Co-op under-estimated the risks of the Britannia acquisition,