October 2 2014 Latest news:
Thursday, April 17, 2014
The Co-operative Group today confirmed an annual loss of £2.5billion amid the worst crisis in its history following the near-collapse of its banking arm.
Interim chief executive Richard Pennycook said: “2013 was a disastrous year for the Co-operative Group, the worst in our 150-year history.
“Today’s results demonstrate that but they also highlight fundamental failings in management and governance at the group over many years.
“These results should serve as a wake-up call to anyone who doubts just how serious the challenges we face are.”
The bulk of the losses relate to the crisis that engulfed the Co-op’s banking arm when a £1.5bn hole was discovered in its finances, following its ill-fated purchase of the Britannia building society and attempts to buy more than 600 Lloyds branches.
A rescue deal means the majority of the bank is now owned by bondholders though the Co-op group remains the largest single shareholder with 30%.
But this stake may be further diluted after it said in today’s statement that it had still not decided whether to take part in a £400million rights issue after the lender said it needed to find more cash than previously thought.
The group said the cash call was an “opportunity, not an obligation” and that it would “consider the full details of the issue in due course”.
It will add to speculation about the possibility of the size of the group’s holding in the bank falling to such a low level that it may not be able to continue operating under the Co-operative brand.
Today’s figures showed the Co-op’s vast debt pile, built up during an acquisition spree which included the Somerfield supermarket chain, stood at £1.4bn.
This was down from £1.7bn in 2012, but comes as lenders are reported to be increasingly troubled by the run of boardroom disputes hampering plans to shake up the group’s corporate structure.
Bitter resistance to the planned changes saw chief executive Euan Sutherland step down last month while former City minister Lord Myners, architect of the reforms, will also leave after putting them to a members’ vote in May.
Group chair Ursula Lidbetter used today’s results announcement to stress the urgent need for change.
The words ‘I’m out’ too often spell the end for an invention before it has even left the drawing board.