The Co-op has also launched an investigation after footage emerged of Flowers (pictured), counting out cash in response to a request for “money for the coke”.
In a statement, Len Wardle said: “The recent revelations about the behaviour of Paul Flowers, the former chair of The Co-op Bank, have raised a number of serious questions for both the bank and the group.
“I led the board that appointed Paul Flowers to lead the Bank board and under those circumstances I feel that it is right that I step down now, ahead of my planned retirement in May next year.”
Wardle added the Co-op needed to change its operations and governance: “I hope that the Group now takes the chance to put in place a new democratic structure so we can modernise in the interests of all our members.”
In a second statement, the Co-op Group said: “Given the serious and wide-ranging nature of recent allegations, the new executive management team has started a fact-finding process to look into any inappropriate behaviour at the Co-op Group or The Co-op Bank and to take action as necessary.”
The group board was also conducting a root and branch review of the structure of the organisation, it added.
As well as chairing the Co-op Bank in the run up to its capital troubles, Flowers was an ex-Methodist minister and chair of the anti-drugs charity Lifeline.
The scandal came to light after a friend recorded and sent a video of his drug deal to the Daily Mirror.
In a statement, Flowers said: “This year has been incredibly difficult, with a death in the family and the pressures of my role with the Co-operative Bank,” he said. “At the lowest point in this terrible period, I did things that were stupid and wrong. I am sorry for this and I am seeking professional help and apologise to all I have hurt or failed by my actions.”
Flowers was summoned in front of the Treasury Select Committee earlier this month in order to answer questions about the failed bid for Lloyds’ TSB branches and the emergence of a £1.5bn capital hole.
A text message sent from Flowers to his friend Stuart Davies said: “I was ‘grilled’ by the Treasury select committee yesterday and afterwards came to Manchester to get wasted with friends.”
In others he said he was on “ket” or ketamine and had the club drug GHB. Davies also said he smoked cannabis with Flowers and witnessed him smoking crack cocaine.
Questions are already emerging about the Financial Services Authority’s decision to approve Flowers as the bank’s chair.
The Co-operative Bank said it had no comment, while the Methodist church said it had suspended Flowers as a result of the allegations.
