LONDON Nov 10 The Co-operative Group
will scrap dividend payments to its 7.6 million members to help
pay for a 1.5 billion pound ($2.4 billion) rescue of its banking
The decision is part of a review of Britain's biggest
customer-owned business - which also runs supermarkets, travel
agencies and funeral services - by new Chief Executive Euan
Sutherland, and could lead to more businesses being sold.
Co-op's Chairman Len Wardle told members of the decision at
the group's general meeting in Manchester this weekend.
"Our decision not to pay a half-year interim dividend was
not one that was taken lightly. But it was viewed by the board
as necessary given the challenges facing the group at this
time," he said.
Co-op, which paid out 64 million pounds in dividends last
year, will instead offer members discount vouchers in stores.
"We still want to make sure that we give some form of
recognition for the loyalty that our members have shown so far
this year," Wardle said.
99.8 percent of members backed plans to rescue the
Co-operative Bank which will hand control of the bank
to investors including U.S. vulture funds.
Co-op Bank hit trouble after racking up big losses on
commercial property. Many of the bad loans were acquired through
its takeover of the Britannia Building Society in 2009 and the
bank's management has subsequently been overhauled.
Co-op Group has bowed to the demands of a group of
bondholders including U.S. hedge funds Aurelius Capital and
Silver Point Capital and agreed to a restructuring of the bank
which will leave it with a 30 percent stake.
The group, which has already sold its life insurance and
savings business, expects to sell its general insurance business
during 2014, and further sales are possible.
"We have to take a long hard look at our businesses and be
honest about their performance," Chief Executive Euan Sutherland