Co-op Bank Hires Veteran Banker Pym to Oversee Restructuring
06/05/2013| 04:51am US/EasternRecommend:
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By Margot Patrick
LONDON--Co-operative Bank on Wednesday hired veteran bank Richard Pym to replace Chairman Paul Flowers and oversee the restructuring of the struggling bank.
Mr. Pym, who previously was chief executive at Alliance & Leicester and will continue to be chairman at U.K. Asset Resolution, the government-owned "bad bank," is the latest big-name hire for Manchester-based Co-op. Last month, it recruited former HSBC Holdings PLC (>> HSBC Holdings plc) executive Niall Booker as its new chief executive.
Co-op Bank's owner, mutual conglomerate Co-operative Group PLC, has also beefed up its board and management team since an abandoned bid for bank branches owned by Lloyds Banking Group PLC (>> Lloyds Banking Group PLC) and a six-notch ratings downgrade at the lending arm on May 9 cast a shadow over the banking business's prospects. On Wednesday, it said it had hired Richard Pennycook as group finance director, replacing Steve Humes.
"We are clearly focused on actions to strengthen the bank's balance sheet and resolving the current underlying issues. This will allow us to continue to provide customers with an alternative choice to the traditional banks. The British banking system is very concentrated, with a small number of institutions, and it is important that The Co-operative Bank plays its full part in maintaining a competitive landscape for customers," Mr. Pym said in a statement.
Euan Sutherland, CEO of the Co-operative Group since Peter Marks left in May, said Mr. Pym's and Mr. Booker's appointments mean "the bank is in very good hands."
Co-op Bank is trying to get back on its feet after souring commercial real-estate loans pushed it to a GBP509.1 million net loss last year and ratings agency Moody's Investors Services stunned bondholders by cutting its credit rating from a single-A level to junk. Moody's said the bank doesn't have enough capital and faces further loan losses.
Co-op says it is working with regulators on a new capital plan that includes selling assets.
Mr. Pym's "appointment could lead us to believe that perhaps some part of the business could also end up at UKAR," credit analyst at BNP Paribas said in a note. A Co-op spokesman declined to comment.
The bank's star has fallen fast since it was lauded in July by politicians including Chancellor of the Exchequer George Osborne for its attempt to triple its size by buying the Lloyds branches and cement its status as a "challenger" bank to the country's big-four lenders--Barclays PLC (>> Barclays PLC), HSBC, Lloyds and Royal Bank of Scotland Group PLC (>> Royal Bank of Scotland Group plc). The deal was called off by Co-op in April because of the poor economic outlook and pressures from increasing regulation.
Mr. Pennycook, the new group finance director, joins from supermarket retailer WM Morrison Supermarkets PLC (>> Wm. Morrison Supermarkets plc), where he was finance director for nearly eight years.
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