Financial News

  • 11 April 2014, 9:22

Co-op 'Power Struggle' As Myners Quits Board

The troubled Co-operative Group's future has been thrown even further into doubt after the former City minister, Lord Myners, quit the board amid opposition to his planned reforms of the business.

News of his resignation emerged just hours after Midcounties Co-operative, which operates Co-operative Energy as well as Co-op-branded food stores, voted against the early conclusions of his review.

The report, which was not due to be completed until the end of the month, will still be led by the peer despite his decision to step down as an independent director.

No reason for his decision was given though the deeper uncertainty over the group's future structure risks splitting the co-operative movement.

In interim findings released last month, after chief executive Euan Sutherland quit citing the group's structure as 'ungovernable', Lord Myners warned the group would collapse unless drastic steps were taken to overhaul a "massive failure" of governance.

His shake-up plans include a move to abolish its 21-member board, splitting it into two with a plc-style panel responsible for commercial decisions and representatives from its traditional membership sitting on a separate body.

It is reported that Midcounties is not the only regional board set to oppose the reforms though the board did accept his interim report's findings.

Lord Myners was appointed to the board in December and tasked with the independent review after a disastrous year for the Co-op in which its banking arm needed to be rescued by hedge funds following the discovery of a £1.5bn hole in its finances.

It has twice delayed the release of its banking division's results - now due on Friday - while the bank faces a series of investigations into what went wrong including scrutiny of the appointment of former bank chairman, Paul Flowers, despite his lack of knowledge of the sector.