The Co-operative Group chief executive, Richard Pennycook, who rebuilt the company after its banking crisis, is to step down.
Steve Murrells, the chief executive of the Co-op’s food division, will replace him.
Pennycook was a key figure in saving the Manchester institution from collapse after the dire financial problems of the Co-operative Bank were compounded by a 2013 tabloid sting that revealed drug use by the bank’s former chairman Paul Flowers.
Murrells joined the Co-op in 2012 and has led a successful turnaround of its once ailing grocery chain. The former Tesco executive will replace the outgoing chief executive on the group board on 1 March.
Pennycook will then leave the business at the end of March, after the company agreed to forego his six-month notice period, leading to speculation that he has another role lined up.
“Richard Pennycook saved our Co-op,” said the Co-op chairman, Allan Leighton. “In three short years he has rescued and rebuilt our business, and restored pride to our 70,000 colleagues and 4.5 million members. We owe Richard a huge debt of gratitude and his place in Co-op history is secured.”
Pennycook will remain on the payroll, however, as he is being retained as an adviser for a fee of £20,000 a month. The role will be focused on the fate of the mutual’s 20% stake in the loss-making Co-op bank. Concerns about the bank’s future have intensified in recent days after it announced that its capital ratio, a key measure of financial strength, would fall below 10%. Leighton said the group was open-minded about the future of the bank stake and did not rule out being part of a plan to inject more capital into the beleaguered lender.
Leighton described the handover to Murrells, who previously ran Tesco’s One Stop convenience chain, as a “classic piece of succession”. Pennycook said his next career step would involve “going plural” – a phrase popularised by Leighton in the 2000s, which refers to building a career out of multiple directorships.