The Co-operative Group is expected to announce the departure of finance director Steve Humes this week as chief executive Euan Sutherland seeks to strengthen the embattled mutual’s management team.
Humes joined the firm in 2000 and spent ten years as director of finance at its food business before being promoted to group chief financial officer at the beginning of 2011. The Co-op is understood to be keen for an external candidate to take over the finance role.
Sutherland – the former chief operating officer at B&Q-owner Kingfisher – last week announced that the Co-op’s banking arm had stopped offering loans to new business customers as he aims to “play to the traditional strengths” of the firm and preserve its capital. Credit ratings agency Moody’s recently downgraded the bank’s debt to junk status and warned it could need “external support” to plug a capital shortfall that some analysts have said could be as high as £1.8 billion.
Moody’s slashed the rating because of costs linked to the Co-op’s takeover of Britannia Building Society in 2009. The agency was also concerned about the Co-op Bank’s bad and doubtful debts because of a deteriorating commercial property book.
Financial regulators said in March that UK banks must raise £25 billion 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 £219 million to Royal London, and is also planning to offload its general insurance arm. It said last week that it has received “a significant number of expressions of interest” for the division as it agreed to sell a trio of Land Rover dealerships in West Yorkshire for £31m to Vertu Motors, which trades as Macklin Motors in Scotland.
Co-op Bank pulled out of a £750m deal to buy 632 branches from Lloyds last month, and the division is currently without a permanent chief executive following the resignation of Barry Tootell. Rod Bulmer, a former Santander UK executive who has been with the group for six years, is heading up the business on an interim basis.
The bank racked up a £662m loss last year because of write-downs related to the Britannia takeover, along with a £150m charge to compensate customers who were mis-sold loan insurance.