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| Ex-City minister Lord Myners quits Co-op Group board | Ex-City minister Lord Myners quits Co-op Group board |
| (about 3 hours later) | |
| Former City minister Lord Myners has quit the board of the troubled Co-operative Group, amid criticism of his plans to reform the business. | Former City minister Lord Myners has quit the board of the troubled Co-operative Group, amid criticism of his plans to reform the business. |
| His departure is another significant blow for the business, which is facing losses of up to £2bn. | His departure is another significant blow for the business, which is facing losses of up to £2bn. |
| The largest of the group's independent societies has opposed his proposals, aimed at making the Co-op's governance more like a publicly-listed company. | |
| But the Co-op says Lord Myners' review will continue, despite his resignation. | But the Co-op says Lord Myners' review will continue, despite his resignation. |
| The group's chief executive, Euan Sutherland, resigned last month after he described the business as "ungovernable". | The group's chief executive, Euan Sutherland, resigned last month after he described the business as "ungovernable". |
| 'Democratic deficit' | 'Democratic deficit' |
| Lord Myners' initial findings said the group's elected directors had overseen "breathtakingly value-destructive" decisions, like the Co-op's takeovers of Britannia building society and supermarket chain, Somerfield. | |
| He also found its three-tier system of elected member representation - made up of area committees, regional boards, and the Group board - had "consistently produced governors without the necessary qualifications and experience to provide effective board leadership". | He also found its three-tier system of elected member representation - made up of area committees, regional boards, and the Group board - had "consistently produced governors without the necessary qualifications and experience to provide effective board leadership". |
| Too many directors, he said, did not have any serious business experience and were therefore not qualified to keep senior managers in check. | Too many directors, he said, did not have any serious business experience and were therefore not qualified to keep senior managers in check. |
| Instead, he recommended new group board directors should be appointed against a clear criteria of skills and experience. | Instead, he recommended new group board directors should be appointed against a clear criteria of skills and experience. |
| And he proposed a new, smaller board, which would replace the current 20 elected directors with an independent chair, six or seven non-executive directors with business experience, and two executives from the group. | And he proposed a new, smaller board, which would replace the current 20 elected directors with an independent chair, six or seven non-executive directors with business experience, and two executives from the group. |
| But some of the Co-op's most influential members are worried the changes could damage the group's values. | But some of the Co-op's most influential members are worried the changes could damage the group's values. |
| 'Deeply concerned' | 'Deeply concerned' |
| Its largest independent society, Midcounties, which along with about a dozen others accounts for 20% of board votes, has already said it will oppose Lord Myners' plans. | Its largest independent society, Midcounties, which along with about a dozen others accounts for 20% of board votes, has already said it will oppose Lord Myners' plans. |
| Patrick Gray, president of Midcounties, told the Today programme on Wednesday that any changes would only take place with negotiation. | |
| "Most of the independent societies are deeply concerned, as we are," he added. | "Most of the independent societies are deeply concerned, as we are," he added. |
| "We all support reform, but we want it to be done in a measured way. We don't want to be pushed into a corner and told either you accept this, or nothing. | "We all support reform, but we want it to be done in a measured way. We don't want to be pushed into a corner and told either you accept this, or nothing. |
| "If he [Lord Myners] puts forward simply a menu on a take it or leave it basis, then we will vote against it." | "If he [Lord Myners] puts forward simply a menu on a take it or leave it basis, then we will vote against it." |
| Peter Hahn of the Cass Business School told the BBC that after "all these years of poor management, maybe Co-op Group is just not manageable in its current form". | |
| But, he added, some of the regional Co-ops are very well run, "so maybe [the group] needs to be split into smaller more manageable units". | |
| Bank troubles | Bank troubles |
| Lord Myners was appointed as a senior independent director by Co-op Group chair Ursula Lidbetter in December, to undertake a full review of the entire business. | Lord Myners was appointed as a senior independent director by Co-op Group chair Ursula Lidbetter in December, to undertake a full review of the entire business. |
| It followed the collapse last year of Co-op Bank's deal to take over 632 Lloyds Bank branches and the arrest of the bank's chairman Reverend Paul Flowers on drugs allegations. | It followed the collapse last year of Co-op Bank's deal to take over 632 Lloyds Bank branches and the arrest of the bank's chairman Reverend Paul Flowers on drugs allegations. |
| Its banking arm alone is preparing to announce a loss of about £1.3bn for 2013. | Its banking arm alone is preparing to announce a loss of about £1.3bn for 2013. |
| In November last year, it announced that a group of private investors, made up mostly of hedge funds, would inject nearly £1bn into the bank in exchange for a 70% ownership stake. | In November last year, it announced that a group of private investors, made up mostly of hedge funds, would inject nearly £1bn into the bank in exchange for a 70% ownership stake. |
| Last month it announced plans to raise another £400m by issuing new shares, following the discovery of additional costs related to past misconduct and poor documentation. | Last month it announced plans to raise another £400m by issuing new shares, following the discovery of additional costs related to past misconduct and poor documentation. |