The Co-op's chief executive admits to a "diasastrous" year for the group, and will need to decide how to reform the sprawling group.
"Good with money" is a slogan the Co-operative Bank dropped 18 months ago.
The former boss of the Co-op's financial group said he warned colleagues of the dangers of taking on Lloyds.
The vote on a radical shake-up of the way Co-operative group is run is "a momentous and defining moment" for the group, Co-op chair Ursula Lidbetter said.
– Co-op chair Ursula Lidbetter
These reforms represent the final crucial step in delivering the change necessary to return the group to health. This will strengthen the society and enable us to move forward with the urgent work to rebuild the business and deliver on our renewed purpose, in the interests of all our colleagues and our millions of members and customers.
The changes to the group's governance were backed by its members following a landmark vote.
A radical shake-up of the way the Co-operative group is run has been approved by its members.
At a special general meeting in Manchester, the crisis-hit company said 83% of votes were cast in favour of proposals drawn up in the wake of last year when the group racked up £2.5 billion losses.
The plans include reform of the food-to-funerals group's board structure, with elected directors - including the likes of a plasterer, engineer and retired deputy head teacher - largely replaced by professional business people.
The new governance structure includes the creation of a smaller board of directors and a move to a one-member one-vote system.
Interim chief executive Richard Pennycook said approval of the governance changes will mark the end of the rescue phase of the group following recent progress in shoring up its balance sheet.
– Ursula Lidbetter, Co-op chair
These governance reforms represent the final crucial step in delivering the necessary change to restore the group and return it to health.
The Co-op is to recruit a smaller board of 11 directors with "high standards of competence" as part of radical governance reforms. The mutual will also establish a 100-member council to act as guardian of the group's values and to hold the board to account.
The changes are based on the four-point resolution proposed by Lord Myners and voted on by members at the special meeting in May.
Other changes include a move to one-member-one-vote on significant matters such as the election of directors and major transactions.
The Co-op, which last year racked up a £2.5 billion loss following the worst period in its 150-year history, said the reforms will be put to a vote at a special general meeting on 30th August.
The Co-operative Group has been voted the UK's most ethical company over the past 25 years.
The retailer finished ahead of Lush, Traidcraft and John Lewis as well as clothing brand People Tree, the bank Triodos and the food and household product wholesaler Suma.
Organic farm Riverford and energy companies Ecotricity and Good Energy also made the top 10 as voted by readers of Ethical Consumer magazine.
Food giant Nestle was voted the least ethical company over the past 25 years in the same survey.
Others companies making up the 10 least ethical companies were Amazon, Shell, Tesco, Barclays, Walmart, Coca-Cola and Primark.
The Co-operative Group has "acknowledged its governance is not up to scratch", Lord Myners said following members unanimously voting for reforms.
Lord Myners said: "I'm thrilled with the outcome today...there has been a fundamental change in position".
A vote in favour of reforming the Co-operative Group is a step in the right direction, the Business Secretary has said, after its members voted "unanimously" for the overhaul.
Vince Cable said: "Lord Myners has identified the key problem of governance and ensuring a consumer base of millions is democratically represented in ways that ensure professional, competent management.
"It is in this latter area that the Co-op has fallen short and why radical solutions are needed to get the Co-op back on track."
The Co-operative has said 100 percent of votes were cast in favour of the resolution to overhaul the group. Speaking to reporters, Co-operative Group chair Ursula Lidbetter announced that its members had voted "unanimously" in favour of returning it to financial health.
The vote for reform of the Co-operative Group is a welcome step in the right direction, the national officer of the Unite union said, after members voted in favour of a major overhaul of the board. Adrian Jones said he hoped it would put the group on the road to stability:
– Adrian Jones, Unite union
Going forward it is vital that our members and employees have a voice in the reform process for it to succeed and ensure the Co-op Group has a fighting chance while retaining its unique values and ethos.
Members of the Co-operative Group have voted in favour of a shake-up over the way it is run. Detailed reforms including rule changes will still have to voted on at a later date and will require at least 66 percent support. The four point resolution has called for:
- The creation of a board of directors ''qualified to lead an organisation of the size and complexity of the Co-operative Group''.
- A move to the concept of ''one member one vote'', but with ''appropriate representation'' for the Co-op's independent societies.
- Establishment of a separate structure which will give the group's eight million members powers to hold the board to account for the performance of the business and ''adherence to co-operative values and principles''.
- Rules to protect against any ending of the group's mutual status.