The Co-operative Group has fallen into the red for the first time since 2013 after writing off the value of its stake in the troubled Co-operative Bank.
The mutual revealed pre-tax losses of £132 million for 2016 as it took a £185 million hit after slashing the value of its 20% holding in the Co-operative Bank to zero.
The Co-operative Bank has been put up for sale amid concerns over its balance sheet strength as it continues to suffer following its 2013 rescue after the discovery of a £1.5 billion black hole in its finances, which left it majority controlled by US hedge funds.
The group posted profits of £23 million in 2015.
It said the move to write off its stake in the Co-op Bank was a "prudent valuation" amid "volatility" caused by the ongoing sale process.
We've made great progress in rebuilding our Co-op, with all our businesses delivering strong performances.
While much remains to be done, our rebuild plans have really started to deliver value for our customers, our members and their communities.
The group gave a cautious outlook for the year ahead, warning: "All of our markets remain fiercely competitive and we face a challenging consumer and economic backdrop."
The up-for-sale Co-operative Bank has posted losses of £477.1 million but said it was "pleased with the interest" from potential bidders.Read the full story ›
The troubled lender, which has four million customers, has initiated a sales plan as concerns rise on its capital position.Read the full story ›
In a scathing report into the governance of the Co-operative Group, former City minister Lord Myners today said radical changes were necessary to return the group to profitability.
The report said the Group's present governance structure was "not fit for purpose" and highlights "deplorable governance failures" that led to the near collapse of the group. Lord Myners calls for:
- A new "highly competent and qualified" Group Board with independent non-executive directors to lead and oversea the executive management teams.
- Genuine co-operative values and principles to be protected in the future governance structure.
- Member benefits should no longer be "deliberately restricted to a tiny and potentially quite unrepresentative body", but should be felt by the whole customer-owned organisation.
Lord Myners has called for the Co-operative Group to make radical changes to restore group profitability, in a damning report in which he blasts some elements of the company for being "struck in denial" over its failings."
I have no doubt that the Co-operative Group can over the next five years reverse a decline that started over 50 years ago. But I am less confident that it will choose to do so.
There is no short cut to recovery from its present weakened state. It will require retrenchment and some painful choices.
Financial health can only be restored through steady, step by step, rebuilding of the group's profitability and repayment of its excessive debt."
Former City minister Lord Myners has laid out his plans for saving the Co-operative Group with a number of "radical" decisions he believes are needed to overhaul the a which last month reported annual losses of £2.5 billion.
The Labour party is looking to end its long-standing relationship with the troubled Co-operative Bank, which stretches back to 1920.
Labour's general secretary Iain McNicol is understood to want to move a £1.2 million loan from the Co-op to the trade union-controlled Unity Trust Bank and current accounts are also likely to be shifted, according to PA.
The move comes after a tumultuous period for the bank, which has seen record losses and the resignation of chairman Paul Flowers, who is now facing drug possession charges.
Labour said the change of loan provider was for "commercial reasons", but the controversy gripping the Co-op over the past year is thought to have strained relations.
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.Read the full story ›
The chief executive has admitted the Co-operative's 'disastrous' £2.5bn losses for 2013 means that "thousands" of jobs will go from the organisation.
Richard Pennycook said: "I wouldn't want to pretend that there won't be job losses. We have said that there will.
"I don't want to put a specific number on [fewer people working for the Co-operative] but it will be a smaller group, some thousands of people smaller than that.
"Some of those because of our colleagues, in businesses that we are selling, will be going with those businesses to new owners."
He said that the group would remain a "very significant" employer in two years' time, adding that within four weeks the organisation's AGM would reveal the "new shape of the group", and a "clearer idea of how it is going to look".