Troubled Co-op Group can take many years to stabilise
Beleaguered Co-op Group's members recently unanimously endorsed Paul Myners' proposed reforms, but the group's interim chief executive Richard Pennycook has warned that that it could take as many as five years to stabilise the mutual.
On Saturday, 160 representatives of regional boards and independent co-operatives approved the controversial reforms in a special general meeting at the group's Manchester-based headquarters. Mr. Pennycook said that the group would now undertake sweeping governance reforms to help the struggling group recover from its last year's £2.5 billion loss.
Pointing out the large scale of the crisis, Mr. Pennycook said that debt interest payments were costing the group ?100 million per year.
Speaking on the topic, "That's ?100m we could not invest to make our food stores better. ?100m we could not share with our members. ?100m sucked down in the City of London rather than staying in the communities where our members live and work."
Members of the group unanimously voted in favor of the sweeping reforms after Mr. Myners, a damning critique of the group's governance, warned that it would go bust unless sweeping reforms were introduced. Mr. Myners resigned as a senior independent director at the group's board last month after playing the role for just four months.
One of the reforms suggested by Mr. Myners is replacing of the Co-op's current 21-strong board of lay members with a smaller board of professional experts. Lack of board-room expertise was one of the many factors that led to decline of the 150-year-old group.