Hedge fund control of Co-op bank is branded 'a tragedy'
Turmoil at the Co-operative Group continued as its chairman said he is quitting and its former chief executive labelled a deal to hand control of its banking arm to US hedge funds a "tragedy".
The customer-owned group said Len Wardle, chairman since 2007, will leave in May.
It follows an appearance by Peter Marks before MPs on the Treasury Select Committee, when the former boss of the funerals-to-supermarkets group refused to take the blame for the Co-operative Bank's demise.
The member-owned group, which has only one banking branch in Northern Ireland, in Belfast, will be left with just 30% of the ethical bank under plans to repair a £1.5bn hole in its balance sheet, with bondholders expected to take majority control.
Mr Wardle said he told the board in August his plan to quit, and insisted the mutual will emerge "stronger than ever".
The former Labour councillor called for a new independent chairman. He said: "The Co-operative is at its best when it is reforming and I want this change to continue."
The Co-op's latest high-profile change follows Euan Sutherland replacing Mr Marks, former Morrisons finance director Richard Pennycook becoming the Co-op's Group's new finance chief and ex-HSBC executive Niall Booker taking the reins of the bank.
Mr Sutherland thanked Mr Wardle for his "leadership and commitment", since he joined the Co-op's board in 1992.
The Co-op, which traces its roots back to 1844 with the Rochdale Pioneers, is finalising a rescue plan for its banking arm which will avoid a taxpayer bailout but cede control to owners of its bonds including US hedge funds Aurelius Capital Management and Silver Point Capital – prompting fears of a customer exodus.
News of his departure emerged hours after Mr Marks, who was group chief executive from 2007 until this May, told MPs the bank will struggle to retain its ethical ethos under its new owners. "It's not a co-op, is it?" he said.
Mr Marks said: "Hedge funds are there to maximise profit. That's what their sole purpose is. To be truly ethical you cannot do that. That does not mean the group cannot be ethical. Without the bank it can focus on its other businesses and be very ethical."
Mr Marks said losing control of the bank could be a "good thing" for the mutual, by allowing the Co-op Group to tighten its focus elsewhere.
"In many ways it could be seen as a good thing because in actual fact it will force the Co-op to focus on less and not stretch its capital," he said.