The Co-operative Group has bolstered its board with the appointment of a new finance director. It has also signalled its determination to remain in the financial services business by naming a new chairman for its loss-making banking arm.
As talks with regulators continue about finding a solution to plug a capital shortfall in its bank of as much as £1.8bn, the Co-op named Richard Pym as its chairman. Pym, who runs a bailed-out banking division for the government, said his new appointment would ensure the Co-op would continue to provide customers with an alternative choice to the traditional banks.
The finance director of the supermarket chain Morrisons, Richard Pennycook, is also joining as interim finance director of the Co-op group, which spans pharmacists, supermarkets and funeral homes.
Pennycook, is credited with creating a four-year turnaround plan for the supermarket chain after its troubled takeover of Safeway. His recruitment could signal a wave of cost-cutting measures across the Co-op group.
They are a latest in sweeping management changes at the 165-year-old mutual which only last month installed Euan Sutherland, from Bamp;Q, as chief executive, replacing life-long Co-op employee Peter Marks.
Sutherland said the bank was now in very good hands after the recruitment of Pym alongside the new boss of the bank, Niall Booker, the former HSBC banker appointed last week. Booker spent his career at HSBC before quitting in 2011 when he was running the US arm which was this week accused by New York of ignoring a law designed to help homeowners struggling with loans during a period when he was charge.
Co-op, plunged into uncertainty after a potentially devastating six notch downgrade to junk status, has stopped lending to small businesses to preserve capital. Pym has so far refused to disclose if the bank intended to resume this activity once the capital situation was rectified.
He told the Guardian he intended to take pay cut at UKAR, which runs the bailed-out parts of Bradford amp; Bingley and Northern Rock, where he will remain as chairman as he will be freeing up time to devote to the Co-op. Pym has also quit as a non-executive director of the commercial property investment firm British Land as he takes on a role at the Co-op. His new job might be regarded as a full-time position given the scale of the issues facing a bank that analysts at Barclays have estimated could have a capital shortfall of as much as £1.8bn.
Even before taking up the Co-op chairmanship, Pym had announced he would take a 5% cut to his £237,500 fee from UKAR, which exists to run down the loans granted by Bamp;B and Northern Rock.
Pym, whose appointment is subject to formal regulatory approval, said: We are clearly focused on actions to strengthen the banks balance sheet and resolving the current underlying issues.
This will allow us to continue to provide customers with an alternative choice to the traditional banks.
He added that the groups ethical stance towards banking would remain a key marketing element.
By juggling two chairmanships in the financial services industry, Pym acknowledged that potential conflicts of interest would need to be managed. I have may to excuse myself [from some discussions], said Pym. The two banks are completely different. UKAR is not looking for new customers.