CO-OPERATIVE boss Richard Pennycook has admitted the group "let the co-operative movement down in a fairly significant way".

Referring to two years of crisis involving a near-collapse and a drugs scandal involving its former bank chairman, Methodist minister and former Bradford councillor Paul Flowers, chief executive Mr Pennycook said its troubles were "shocking and disappointing".

The former Morrisons finance chief believes the movement's 19th Century founders, the Rochdale Pioneers, would be happy at the steps being taken to rebuild its reputation.

"We let the co-operative movement down in a fairly significant way. After 150 proud years where the Co-op had a reputation for doing the right thing.

"But today as we look forward to rebuilding the movement I think the Rochdale Pioneers would be excited by the potential that we have to do that," he said in a radio interview.

The Co-op bank nearly collapsed in 2013 and dragged the wider Co-operative group to a £2.5 billion annual loss that year, after a £1.5 billion hole was discovered in the lender's balance sheet.

It had to be rescued in a deal which saw the group's stake in the lender shrink from 100 per cent to 20 per cent as it ceded majority ownership to bondholders including US hedge funds.

The bank'#s reputation was also damaged after a drugs scandal involving former bank chairman Paul Flowers and sharp criticism of how he was appointed to the role despite a lack of experience.

Mr Pennycook said the Co-op was rebuilding its governance from scratch .Its AGM is on Saturday in Manchester