Ex-City minister joins Co-op board

Former City minister Lord Myners has joined the Co-operative Group board on a token annual salary of £1 to lead a review into how the troubled business is run.

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Lord Myners will take on the newly created role of senior independent director

Former City minister Lord Myners has joined the Co-operative Group board on a token annual salary of £1 to lead a review into how the troubled business is run.

Lord Myners - a financial services minister under the previous Labour government and former chairman of Marks & Spencer - has been hired with immediate effect in the newly-created role of senior independent director at the Co-op, marking the first external appointment to the group's board.

He will earn just £1 a year for his efforts to help restore the group's reputation following the scandal surrounding disgraced former Co-op Bank chairman Paul Flowers and the financial crisis at its banking arm.

Lord Myners will lead a review of the group's 160-year-old democratic process, as well as the make-up of its board and how it is chaired.

The Co-op's recent woes have raised questions over corporate governance standards and the appointment process to the mutual's board amid fears that ethical standards have taken precedence over experience when key figures have been appointed into power.

Its democratic process sees directors voted for by members and the chairman can only be appointed from within its board.

Lord Myners said he would work with the rest of the board to help the Co-op "realise its potential" after its series of reputational blows.

He said: "Right now it faces serious challenges in terms of business performance and ensuring that the right governance is in place to deliver in the interests of all its members and customers."

The Co-op will also further strengthen its board with another two independent non-executive directors.

Ursula Lidbetter, recently hired chair of the Co-op Group, said: " Our rules allow for the appointment of independent non-executive directors to strengthen the elected board members, and now is the right time to make that move.

"We have made it clear that we need to modernise and to embed the very best standards of corporate governance - while also ensuring that the voices of all our members and customers resonate through the business."

Lord Myners was appointed Treasury minister in October 2008, at the height of the financial crisis - a role he held until May 2010.

He has also chaired a number of firms, including Land Securities and Guardian Media Group, and was previously deputy chairman of electricity provider Powergen, since bought by German firm E.ON.

Euan Sutherland, chief executive of the Co-op, said he "brings significant and valuable experience" to the group's board.

His appointment comes as the Co-op faces a full Treasury-led inquiry into its bank's ailing finances and the decision to appoint Mr Flowers, while the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) are considering a formal enforcement investigation into the bank.

In July, the mutual appointed f ormer Treasury mandarin Sir Christopher Kelly to head an independent investigation into what went wrong at its banking business.

The Co-op pledged a root-and-branch review of its democratic structure and corporate governance last month following allegations over the behaviour of Mr Flowers, who has been bailed after being questioned by police officers investigating allegations of drug supply offences.

It emerged in parliamentary hearings that Mr Flowers notched up just four years of relevant banking experience - and those were gained while working at NatWest bank after leaving school more than 40 years ago.

He presided over the bank's board at a time when it incurred mounting losses and amassed a £1.5 billion black hole in its balance sheet.

It is now set to fall into the hands of a group of investors, including US hedge funds, and is expected to close around 50 of its 324 branches, leading to hefty lob losses.

Bondholders in the bank overwhelmingly voted in support of the rescue plan late last month and the results were rubberstamped yesterday through a further ballot, with the remaining legal technicalities set to be cleared on December 18.