The Co-operative Group has unveiled new proposals to restructure the organisation and prevent another disaster like the £1.5bn hole in its balance sheet.
The Co-op was forced to pull out of a bid to buy 632 Lloyds Banking Group branches in April last year last year after it revealed a £1.5bn capital black hole. The capital shortfall prompted a rescue deal which saw Co-op Group cede control of the bank to bondholders, mainly hedge funds.
The new structural changes have been put forward following a damning report by City veteran Paul Myners, who said the Co-op had to change or face demutualisation.
However, the Co-op has stopped short of Myners’ recommendation that all current board members be removed.
The changes will see the Co-op board reduced to nine people from 18 and be made up of five independent non-executives, two executive directors including the chief executive, and three member-nominated directors.
Recruitment of the new board members will begin immediately.
The reforms will create a council to represent members and to act as guardian of the group’s “values and principles”, with the power to hold the board to account.
It will be composed of a maximum of 100 Members, led by a president who will be elected for two-year terms.
The council will also elect a senate to “help co-ordinate the activities of the council and to act as a nexus for interactions” between the council, the board, the executive and members.
Co-op Group chair Ursula Lidbetter says: “These governance reforms represent the final crucial step in delivering the necessary change to restore the group and return it to health. This has been a process built on co-operation, focusing above all on creating a society where every member has a voice in shaping the group’s future.”