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Co-op boss Euan Sutherland offers his resignation | Co-op boss Euan Sutherland offers his resignation |
(about 1 hour later) | |
Co-op Group chief executive Euan Sutherland has offered his resignation, the BBC's Robert Peston has learned. | Co-op Group chief executive Euan Sutherland has offered his resignation, the BBC's Robert Peston has learned. |
Mr Sutherland says in the letter he believes the group is "ungovernable" under its current structure. | Mr Sutherland says in the letter he believes the group is "ungovernable" under its current structure. |
To persuade him to stay, the board has agreed to restructure so it can be managed in a more conventional way. | To persuade him to stay, the board has agreed to restructure so it can be managed in a more conventional way. |
However, that reform has to be agreed by Co-op's members and their elected representatives | However, that reform has to be agreed by Co-op's members and their elected representatives |
'Transformation' | 'Transformation' |
Mr Sutherland's resignation offer comes after reports suggested the group was recommending he should get a remuneration package worth £3.66m for 2013. | Mr Sutherland's resignation offer comes after reports suggested the group was recommending he should get a remuneration package worth £3.66m for 2013. |
After the revelations over executive salaries, Mr Sutherland said on the Co-op's Facebook page there seemed to be "an individual, or individuals, determined to undermine me personally", but said he was "determined" to see through "the vital transformation of our business". | After the revelations over executive salaries, Mr Sutherland said on the Co-op's Facebook page there seemed to be "an individual, or individuals, determined to undermine me personally", but said he was "determined" to see through "the vital transformation of our business". |
He added: "We appear to have disaffected people who are determined to make life difficult and embarrassing for the Co-operative at a time when what we need most are professionalism and loyalty to the business." | He added: "We appear to have disaffected people who are determined to make life difficult and embarrassing for the Co-operative at a time when what we need most are professionalism and loyalty to the business." |
Mr Sutherland, who joined last May, said last month that 2013 had been "perhaps the worst year" in the Co-op's long history and it had "lost its way". | Mr Sutherland, who joined last May, said last month that 2013 had been "perhaps the worst year" in the Co-op's long history and it had "lost its way". |
It followed a year of financial problems in its banking division and the scandal involving the division's former chairman Paul Flowers, who was arrested for alleged drug offences. | It followed a year of financial problems in its banking division and the scandal involving the division's former chairman Paul Flowers, who was arrested for alleged drug offences. |
'Mutual movement' | 'Mutual movement' |
Mr Sutherland is thought to be "demoralised and fed-up", according to the BBC's business editor. | Mr Sutherland is thought to be "demoralised and fed-up", according to the BBC's business editor. |
The resignation letter is broadly a "back-me-or-sack-me move" but he "still may well resign", the BBC understands. | The resignation letter is broadly a "back-me-or-sack-me move" but he "still may well resign", the BBC understands. |
Meg Hillier, Labour and Co-operative MP for Hackney South and Shoreditch, told BBC Radio 4's Today programme she was "shocked" Mr Sutherland was offering his resignation. | Meg Hillier, Labour and Co-operative MP for Hackney South and Shoreditch, told BBC Radio 4's Today programme she was "shocked" Mr Sutherland was offering his resignation. |
"He is running an organisation that is still run by its members, and he needs to be accountable to them. The Co-operative movement is a mutual movement where we make decisions together," she said. | "He is running an organisation that is still run by its members, and he needs to be accountable to them. The Co-operative movement is a mutual movement where we make decisions together," she said. |
'Good professional' | 'Good professional' |
Lord Levene, who headed a rival bid for Lloyds TSB branches in competition with the Co-op Bank, told the BBC that Mr Sutherland's resignation offer seemed to be part of a "never ending" series of misfortunes for the group. | Lord Levene, who headed a rival bid for Lloyds TSB branches in competition with the Co-op Bank, told the BBC that Mr Sutherland's resignation offer seemed to be part of a "never ending" series of misfortunes for the group. |
"They got in a good professional to run the place, and it seems he looked, and decided it wasn't for him," Lord Levene said. | "They got in a good professional to run the place, and it seems he looked, and decided it wasn't for him," Lord Levene said. |
Co-op Bank was rescued last year under a deal with its bondholders after it emerged that it faced a £1.5bn black hole. | Co-op Bank was rescued last year under a deal with its bondholders after it emerged that it faced a £1.5bn black hole. |
That black hole caused the bank's proposed takeover of more than 600 Lloyds TSB branches to fall through. | That black hole caused the bank's proposed takeover of more than 600 Lloyds TSB branches to fall through. |
Later that year the company was hit by a fresh scandal when Mr Flowers was arrested in connection with a drug supply investigation. He remains on police bail. | Later that year the company was hit by a fresh scandal when Mr Flowers was arrested in connection with a drug supply investigation. He remains on police bail. |
The Co-op last month launched a nationwide poll - open until 24 March - to ask people for their views on its future. | The Co-op last month launched a nationwide poll - open until 24 March - to ask people for their views on its future. |
The results will be published at the group's annual meeting in May. | The results will be published at the group's annual meeting in May. |
'Clash of cultures' | |
Mr Sutherland's resignation offer may have come about due to disagreements at board level on the direction the Co-operative Group should be taking, John Thanassoulis, professor of financial economics at Warwick Business School, told the BBC. | |
"This is a comment on how viable the Co-operative Group's business model is - can it survive or does it not work?," the banking governance expert said. "I see this as a fascinating clash of cultures." | |
Mr Sutherland was seeking to evolve the business in a way that would have resulted in job losses, the sale of co-operative farms, and the possible sale of the co-operative pharmacy business, Prof Thanassoulis said. | |
Members may have seen this as being against the ethical business model of the group, and resisted such changes, he added. |