By Mark Kleinman, City Editor
Allan Leighton is in talks to become the first independent chairman of the Co-operative Group in a move that would herald a crucial stage in the mutual's efforts to reinvent itself after two years of crisis.
Sky News can exclusively reveal that Mr Leighton is in advanced discussions with the Co-op Group's board, with an announcement possible as soon as this week.
Negotiations between Mr Leighton and the Co-op board were understood to be continuing, with a board meeting scheduled for Tuesday to ratify the appointment, according to insiders.
The Co-op was continuing to talk to a number of other candidates for the chairmanship while it remained uncertain whether Mr Leighton would be appointed, a source added.
If Mr Leighton does take the role, the arrival of one of Britain's most high-profile businessmen would be a coup for one of the country's most popular, if troubled, organisations.
A former chief executive of Asda, he became a prominent figure during talks over the future of Royal Mail during a stint as its chairman several years ahead of the postal operator's privatisation.
Mr Leighton has amassed a string of blue-chip boardroom roles during the last decade, including at internationally owned businesses such as Selfridges.
His other jobs have included a non-executive directorship of Sky, the parent company of Sky News, and chairmanships at Lastminute.com, the set-top box manufacturer Pace, and retailers including Pandora, Peacocks and Matalan.
Joining the Co-op would represent an important personal step for Mr Leighton, who has frequently cited his father's career as a Co-op store manager in media interviews during recent years.
During his time at Royal Mail, Mr Leighton advocated transforming the business into a mutually owned organisation, and he is understood to be seeking a range of assurances
The Co-op has been seeking a new chairman to succeed Ursula Lidbetter, who took on the role temporarily last year, for several months.
The Co-op was left reeling in 2013 when it emerged that its banking arm was facing a £1.5bn black hole as it tried to acquire more than 630 branches from Lloyds Banking Group.
The bank's chairman, Paul Flowers, was subsequently exposed by a tabloid newspaper as a serial drug-user, plunging the Co-op name deeper into crisis even as it surrendered control of the high street lender to American hedge funds.
Last month, the Co-op Bank was the only one of eight financial institutions to fail tough stress tests imposed by the Bank of England, underlining the ongoing need for a restructuring of its balance sheet.
Separate independent inquiries led by Lord Myners, the former City Minister, and Sir Christopher Kelly, a former civil servant, concluded that there was a need for an urgent overhaul of the Co-op's governance, board structure and array of commercial activities.
Sir Christopher has since joined the board himself, while Lord Myners stepped down following a brief period as a director.
There was further turmoil at the top last year when Euan Sutherland quit as the group's chief executive after details of his pay package were leaked to the media.
Mr Sutherland was replaced by Richard Pennycook, a former director of Wm Morrison, the supermarket chain.
Since then, Co-op members have voted to approve reforms including reducing the number of lay directors on its board and the appointment of a majority of independent directors.
Last year, the Co-op Group - which boasts annual turnover of £11bn from businesses ranging from food retailing to funeral-care - returned to the black following a £2.5bn loss in 2013.
The group's 7 million members will have the opportunity to vote this year on whether it should end decades of financial support for the Labour Party.
A Co-op spokeswoman declined to comment on Monday, while Mr Leighton could not be reached for comment.
