THE Co-operative Group has named former HSBC North America boss Niall Booker as chief executive of its banking arm as it battles to rebuild confidence in the business.
The 54-year-old takes the hot seat left vacant by the shock resignation of Barry Tootell, who stepped down earlier this month when ratings agency Moody’s downgraded the Co-operative Bank’s debt to junk status and warned it could need “external support” to plug a capital shortfall.
The group’s Scots-born chief executive, Euan Sutherland, said that, with 30 years in banking and suitable “strategic and operational skills”, Booker was the ideal person to lead bank at “this important time in its history”.
“The board and I are confident that Niall will add tremendous value, helping us work through the complex issues that we currently face as we work to re-position our bank,” he said.
Sutherland, a former chief operating officer at Kingfisher with no formal experience in banking, is looking to shake up management after taking the helm earlier this month. The group is expected to part company with finance director Steve Humes this week.
Last week Sutherland announced Co-op Bank had stopped offering loans to new business customers as he aims to “play to the traditional strengths” of the firm and preserve its capital.
Co-op Bank pulled out of a £750 million deal to buy 632 branches from Lloyds last month. It racked up a £662m loss last year because of write-downs related to its 2009 takeover of Britannia Building Society, along with a £150m charge to compensate customers who were mis-sold loan insurance.
Financial regulators said in March that UK banks must raise £25bn of extra capital by the end of the year to absorb any future losses on loans. State-backed lenders Lloyds Banking Group and Royal Bank of Scotland have already agreed plans to shore up their capital. Discussions with other banks, including the Co-op, are expected to be completed by the end of next month.
The mutual has agreed to sell its fund management and life insurance businesses for £219m to Royal London, and is also planning to offload its general insurance arm. Sutherland said yesterday that the Co-operative Bank had “a strong future”.
“While there is much work to be done, we are confident that we can continue to provide a distinctive, consumer-led alternative on the high street, offering real choice for customers,” he said.
Booker, who also becomes deputy chief executive of the Co-operative Group, said he would focus on strengthening the bank’s balance sheet to resolve its “underlying issues”.
He said: “There are no quick fixes here, but with the support of the Co-operative Group, our staff and our loyal customer base, I am confident we will be able to stabilise and develop the franchise.”
His appointment comes as Royal Bank of Scotland become the latest bank to appoint a former industry regulator as it seeks to clean up its reputation in the wake of the Libor scandal.
Jon Pain was head of supervision at the Financial Services Authority (FSA) before joining KPMG in 2011 and is due to become RBS’s head of conduct and regulatory affairs in August.