The Co-operative Group said on Tuesday that Len Wardle had resigned as its chairman with immediate effect, days after the former chairman of its banking arm was embroiled in a drugs scandal.
Wardle said he had decided to step down ahead of his planned retirement in May due to his role in appointing Paul Flowers to lead the bank's board.
Flowers, a Methodist preacher, was recently filmed allegedly arranging to buy drugs, prompting a furore at the Co-op.
"The recent revelations about the behaviour of Paul Flowers, the former chair of The Co-operative 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 said in a statement.
Co-op said Wardle would be replaced by Ursula Lidbetter, currently group deputy chair and chief executive of the Lincolnshire Co-operative Society.
Lidbetter will lead the group through a review prompted by the Flowers' scandal.
Follow us on Twitter: @CNBCWorld