The Co-op today called in the boss of Britain's official "bad bank" to sort out its own troubled lender.
Richard Pym, chairman of UK Asset Resolution which runs the bad bank parts of Northern Rock and Bradford & Bingley, is becoming chairman of the Co-op Bank - which has an estimated £1 billion black hole in its balance sheet - with immediate effect.
He will lead its discussions with the Bank of England's Prudential Regulatory Authority over repairing the balance sheet. His appointment has been cleared by UKFI, the body which holds the Government's stakes in bailed-out banks.
At the same time Richard Pennycook, former finance director of supermarket chain Morrison, is becoming finance director of the whole Co-op Group. He replaces Steve Humes who was forced to resign last week following the massive downgrading of the Co-op Bank by credit rating agency Moody's two weeks earlier. That followed the Co-op's failure to buy 632 Lloyds branches for £750 million.
The new chief executive of the Co-op Group, Euan Sutherland, today also saw off his deputy Martyn Wates who had been at the group 16 years. He was paid £970,000 last year including a £164,000 bonus and is likely to receive a year's pay-off. The chairman of the Co-op Bank for the last three years, Paul Flowers, is also departing.
Asked if he would be taking on the chair of a second bad bank, Pym responded: "The Co-op is not a bad bank. Clearly there are some questions which we have to address and we will be doing that in full co-operation with the PRA. I wouldn't be here unless I was confident that we can work through all the issues, which have been well reported. The UK banking market is dominated by a very small number of very big players and the Co-op offers people a real alternative as a bank. All the research shows the Co-op Bank is loved by customers."
On the bank's black hole Pym said: "I am not going to ascribe any colour or vacant space whatsoever to the bank." He said he was "very impressed" by Sutherland and the bank's new chief executive, Niall Booker.