The Co-operative Bank is looking to offload a portfolio of loans
Co-op retail chief Steve Murrells will replace Richard Pennycook as CEO
The executive who helped revive the Co-operative Group, Britain’s biggest mutual, in the wake of the biggest crisis in its history is to step down later this year.
The Co-op rushed out a statement on Tuesday afternoon in response to a Sky News report that Richard Pennycook would hand over the reins of the food-to-funerals group to Steve Murrells, the head of its retail business.
Mr Pennycook’s departure will come three years after he was handed the daunting task of rebuilding the Co-op’s fortunes after a series of governance and operational failings had cast doubt over its future.
An improvement in the fortunes of its food retailing arm and a revival of its historic membership scheme have pointed towards a brighter outlook for the Co-op’.
Its chairman, Allan Leighton, hailed Mr Pennycook as the Co-op’s saviour, adding: “In three short years he has rescued and rebuilt our business and restored pride to our 70,000 colleagues and 4.5 million members.
“We owe Richard a huge debt of gratitude and his place in Co-op history is secured.”
The news of Mr Pennycook’s departure comes less than a year after he asked fellow directors to sanction a big pay cut in a symbolic move which reflected the mutual’s transition from crisis to recovery.
Mr Pennycook is to step down later this year
The group said on Tuesday that the next phase of its rebuilding plan would be led by Mr Murrells, who has run its retail business since 2012.
Mr Pennycook will remain a consultant to the Co-op with a specific remit to advise on its relationship with the troubled bank which bears its name.
A black hole in the balance sheet of the Co-op’s banking arm led to the group relinquishing overall control of the division in 2013, and paved the way for a radical overhaul of the organisation’s governance and structure.
Under Mr Pennycook and Allan Leighton, the chairman, the Co-op has sold a number of businesses, including its pharmacy and farming operations.
“The CEO who is to lead the Renewal phase in 2018 has to be the CEO who builds the plan in 2017,” said Mr Pennycook.
“In passing the baton to Steve, I leave safe in the knowledge that the Co-op will be taken forward by a leader who shares our vision of what can be achieved in the future.”
A former finance director of Wm Morrison, the supermarket chain, Mr Pennycook joined the Co-op in the same role in 2013.
He was promoted to the top job a year later when Euan Sutherland quit after media coverage of his multimillion pound salary.
Although Mr Pennycook is regarded as having done an excellent job at the helm, he will leave amid unresolved questions about the future of the Co-op Bank.
The succession announcement also comes on the same day that the Co-op relinquished its status as the UK’s fifth-biggest supermarket chain to Aldi.
Mr Murrells, who will continue to earn the same £750,000 annual salary in his new role, said: “All the signs are that consumers are looking for a different type of business, one that looks after them and their communities and I truly believe that the Co-op is that business.
“We have amazing colleagues and a growing and more engaged membership.
“Now is our time and we are ready to show the country that good businesses that do good things offer a better future for us all.”
The Co-op said Mr Murrells would be able to earn up to an additional £1.5m each year under two incentive plans.