Co-op Bank To Name Worth As Finance Chief

The troubled Co-operative Bank is to replace its finance director as it grapples with the legacy of problems that brought it to the brink of collapse three years ago.

Sky News has learnt that John Baines, who became chief financial offer of the lender in April 2013, is to step down.

Sources said on Friday that he would be replaced by John Worth, a former Barclays (LSE: BARC.L - news) executive who more recently was the interim CFO of Hiscox (Swiss: 27373019.SW - news) , the insurance company.

The change of leadership will come as Niall Booker prepares to step down as the Co-op Bank's chief executive in the coming months.

A statement about Mr Worth's appointment is expected as soon as Friday afternoon.

The move will underline the Co-op Bank's ongoing turnaround efforts as it remains burdened by various clean-up costs, with losses last year hitting £611m.

The Co-op Group, which slashed the value of its 20% stake in the bank by nearly one-fifth earlier this year, is expected to appoint its own representative to the lender's board.

Alistair Asher, the Group's general counsel, is likely to take up the role.

Despite making significant progress in its core business, the Co-op Bank has continued to struggle since a rescue deal was agreed with American hedge funds in 2013.

It has said that it is likely to be loss-making for another two years.

The Co-op Bank's discovery of a £1.5bn black hole, which emerged as it was trying to buy more than 600 branches from Lloyds Banking Group (Other OTC: LLOBF - news) , sparked a wider governance crisis at the mutual, which has since sold a string of other assets to rebuild its finances.

In January, two former Co-op Bank executives - Barry Tootell, its former chief executive, and Keith Alderson, the former managing director of its corporate and business banking division - were fined and banned by the Prudential Regulation Authority for their stewardship of the lender.

The Co-op Bank's former chairman, Paul Flowers, brought it into disrepute when his drug-taking and sexual proclivities were exposed by a tabloid newspaper, while his financial competence was questioned by MPs.

Banking sources believe the Co-op Group is likely to sell its stake in the bank in the next couple of years, possibly as part of a merger with another 'challenger' bank.

The Co-op Bank declined to comment.