UK's Co-operative to scrap half-year dividend payouts

Sun Nov 10, 2013 8:19am EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Matt Scuffham

LONDON (Reuters) - The Co-operative Group CWSGR.UL 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 division.

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 CPBB_p.L 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.   Continued...

 
A Union Jack is reflected in a window of a branch of the Co-operative Bank in the City of London November 4, 2013. REUTERS/Andrew Winning