Co-op CEO Euan Sutherland Offers to Resign as Bank is “Ungovernable”
Co-op CEO Euan Sutherland Offers to Resign as Bank is 'Ungovernable'Reuters

The Co-operative Group's newly installed chief executive Euan Sutherland has allegedly offered his resignation in a letter which states the embattled bank is "ungovernable".

According to a BBC report, Sutherland has offered to leave, as the bank tries to overhaul its structure and strategy after near financial collapse and a sex and drugs scandal involving its former chairman Paul Flowers.

Sutherland is thought to be "demoralised and fed-up," according to the BBC.

The resignation letter is broadly a "back-me-or-sack-me move" but he "still may well resign," said the report.

Around 30 minutes after the news broke, Sky News and BBC sources claimed that Sutherland has actually resigned on "a point of principle".

Sutherland joined Co-op in May Last year. Representatives were not immediately available for comment.

Trouble started in May 2013, after the Co-op Bank's head of banking Barry Tootell resigned after ratings agency Moody's suggested that the British government may have to bailout the lender.

Moody's slashed the bank's debt rating to "junk" status, due to concerns that the lender had a black hole in its balance sheet.

On 22 November, police arrested former chairman Paul Flowers, as part of an investigation into the supply of illegal drugs. He has since been bailed.

In January 2013, the Co-op unveiled the first set of details surrounding its benchmark internal review.

Lord Myners, who will receive a token £1 salary for his work as chairman of the Co-op's internal governance review, will be scrutinising the ethical organisation's democratic systems and control structures within two phases.

During the first phase, the review will focus primarily on the development of recommendations for strengthening the board structure, composition, working processes and board policies, following the scandal surrounding its former chairman Paul Flowers, that has allegedly been embroiled in taking hard drugs and engaging in paid-for sex orgies.

Myners said the review board will report on findings and recommendations by April 2014.

In Phase 2 of the review, expected to be completed in late 2014, recommendations will be developed for strengthening links with members, as well as with other customers of the group and its employees, in a bid to quell any concerns over the bank's stability.

Sutherland is set to receive £3.7m for his first year in the job while the bank hikes up the salaries of seven other senior executives to between £500,000 and £900,000, while preparing for a possible 5000 redundancies.

The Co-op's chairman, Ursula Lidbetter, confirmed that newly installed CEO Sutherland will receive a base salary of £1.5m for 2014, a £1.5m retention payment. Along with pension contributions and compensation for buying him out of his previous contract, Sutherland will receive £3.66m this year.

This is nearly three times more than his predecessor received.