Co-Op Must 'Work To Rebuild Customer's Trust'
The chairman of the Co-operative Group has told Sky News that the mutual will need to work hard to rebuild customers' trust.
Ursula Lidbetter said the Co-op must also implement governance reform in the wake of chief executive Euan Sutherland's resignation.
"The situation we are in is very sad, but the basis of the organisation is still there," Ms Lidbetter told Sky's Poppy Trowbridge.
"Our members, our customers, our staff, the members who get involved in our democracy - they are such good people.
"The organisation, fundamentally, is really good and sound but we need to get the public's support back with us.
"It's all about customer confidence. It's about doing the right thing."
The Group confirmed a Sky News report this morning that Mr Sutherland had left his job, despite efforts by the board to change his mind.
Mr Sutherland resigned on a point of principle, citing the Group's structure as "ungovernable".
He was also known to be furious over a number of leaks to the media - leaks that he believed had come from the top of the organisation and included details of his pay.
Mr Sutherland said in a statement: "It is with great sadness that I have resigned as chief executive.
"I have given my all to the business and had hoped to be able to lead its revival. However, I now feel that until the Group adopts professional and commercial governance it will be impossible to implement what my team and I believe are the necessary changes and reforms to renew the Group and give it a relevant and sustainable future.
"Saving The Co-operative Bank and with it The Co-operative Group from administration was a huge task, but the changes required do not stop there, with fundamental modernisation needed to safeguard the 11 future for our 90,000 colleagues and millions of members.
"The Group must reduce its significant debt and drive major efficiencies and growth in all of its businesses, but to do so also urgently needs fundamental governance reform and a revitalised membership.
"I will not accept the retention payments and long term incentive payments previously agreed for the delivery and protection of value in the Group and the Bank, even though this was successfully delivered."
Ms Lidbetter confirmed Richard Pennycook - who was chief financial officer - had been appointed interim chief executive pending the appointment of a permanent successor to Mr Sutherland.
She said she had accepted his resignation with "deep regret."
An emergency board meeting on Monday night - held to discuss Mr Sutherland's resignation - also proposed a restructuring that would result in the current 21-member board being disbanded and replaced by two different structures.
One would be a PLC-type board while the other would represent members.
Ms Lidbetter has described the planned reforms as urgent.
The decisions were taken following a crisis for the Co-op which has seen its banking operation subjected to regulatory scrutiny after control was lost to US hedge funds.
A £1.5bn black hole in the bank's balance sheet sparked the Co-op's problems but the restructuring of the lender left the Group with just a 30% stake.
Mr Sutherland's own role was in focus at the weekend over plans to raise his own pay to £3.6m despite the mutual's problems and an expected worst-ever loss for 2013 of £2bn, due to be announced at the end of the month.
The debate over rising awards at the Co-op began just weeks after Mr Sutherland admitted the Group had "lost touch" with customers.
At that time he launched an online poll so the public could make suggestions about its future direction.
A plan to sell parts of its business also left question marks over more than six thousand jobs.
Mr Sutherland has only been in the job since last April.
He expressed fury about media leaks on Sunday in a Facebook posting to an employees' group after the news on pay awards appeared in a national newspaper.
He said: "I'm very sorry to have to report that we have had yet another leak to the media.
"This time it is to the Observer newspaper and concerns levels of annual Executive remuneration, including my salary, and also proposed changes to the Group Executive team.
"It appears that, once again, the leak has come from our Group Boardroom.
"We seem to have an individual, or individuals, determined to undermine me personally, my team and the rest of the Group Board regardless of the uncertainty and disruption this causes to our 90,000 colleagues and our supportive members.
"Despite this, I am determined that we will see through the vital transformation of our business."
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