THE CO-OPERATIVE Group’s chairman Len Wardle said yesterday he will stand down from the role, shortly after former chief executive Peter Marks claimed the mutual’s governance structure is dangerously out of date.
His surprise departure comes as the group finalises months of intense negotiations with hedge funds over the future of the Co-op Bank. The group is set to lose majority ownership as it struggles to recapitalise the lender.
Ex-chief Marks was grilled by MPs on the Treasury Select Committee (TSC) investigating the collapse of the Co-op Bank’s bid for 632 Lloyds branches that were up for sale.
Marks said the failure was due to unexpected losses from the Britannia Building Society, which the Co-op took over in 2009.
But he denied most of the responsibility, blaming then-bank boss David Anderson for the bad purchase.
Anderson declined to comment, telling City A.M. he is involved in the Co-op’s internal investigations.
Marks also blamed the Co-op’s democratic mutual structure for the problems. The group’s members elect the board, who also elect the chairman, meaning it is not made up of professional directors.
“There are areas of governance within the Co-op that absolutely need to change,” Marks said, telling MPs he tried to warn the board the group was overstretched. “In a PLC, the chief executive is on the board. In the Co-op movement that is not the case – it is the role of the CEO to try to persuade the board with regard to strategy.”
And TSC chairman Andrew Tyrie said the existing democratic structure has failed to help customers as intended. “Being owned by a mutual, the Co-op Bank differed from most of its competitors. But on this evidence, its shortcomings did not,” he said.
One part of the setup may be about to change – outgoing chair Len Wardle said he wants his successor to be independent, from outside the group.
The recapitalisation of the bank will see investors – led by a group of hedge funds – put £900m into the lender, with the Co-op Group putting in £600m. But the group’s stake in the bank will be cut to around 30 per cent.