The Co-op Group has confirmed chief executive Euan Sutherland has resigned with immediate effect.
It follows news this morning that Sutherland had tendered his resignation in a letter to the board.
He will be replaced by chief financial officer Richard Pennycook who will take the role of interim group chief executive.
Sutherland joined the Co-op last May. Yesterday the Co-op recommended to shareholders they agree a bonus package worth £3.66m for Sutherland.
In a statement, Sutherland says: “It is with great sadness that I have resigned as chief executive. I have given my all to the business and had hoped to be able to lead its revival. However, I now feel that until the group adopts professional and commercial governance it will be impossible to implement what my team and I believe are the necessary changes and reforms to renew the group and give it a relevant and sustainable future.
“Saving The Co-operative Bank and with it The Co-operative Group from administration was a huge task, but the changes required do not stop there.”
Sutherland says the business needs to reduce debts, modernise and improve efficiency across all divisions.
He adds: “I will not accept the retention payments and long-term incentive payments previously agreed for the delivery and protection of value in the group and the bank, even though this was successfully delivered.”
Co-op chair Ursula Libbetter says: “Last year, Euan and his team saved the The Co-operative Bank, without recourse to the taxpayer, and in doing so rescued the Group from the biggest crisis in its 150-year history. They have worked night and day to renew the organisation and to give it a sustainable future.
“Euan’s resignation must now act as a catalyst for the real and necessary change which the group must go through.”
Last year the Co-op Bank revealed a £1.5bn capital shortfall, and saw former chairman Paul Flowers embroiled in drugs allegations. The Co-op Group also reduced its stake in the bank to 30 per cent as part of a rescue deal which saw bondholders and hedge funds take a majority stake in the business.