Former chief executive Euan Sutherland resigned from the company yesterday after less than a year in the role.
Pennycock, who joined the Co-operative from Morrisons supermarket, has been with the firm since 2005 and will now be tasked with improving the ailing giants future.
Troubles started at the Co-operative last year when a £1.5bn blackhole was discovered in the accounts of its banking division.
The Co-operative brought Sutherland in to try and repair the damage however he has now stepped aside branding the firm as “ungovernable”.
Ursula Lidbetter, chair of The Co-operative Group, said: “Last year, Euan and his team saved the The Co-operative Bank, without recourse to the taxpayer, and in doing so rescued the Group from the biggest crisis in its 150-year history.
“They have worked night and day to renew the organisation and to give it a sustainable future.
“Euan’s resignation must now act as a catalyst for the real and necessary change which the Group must go through. I would like to thank Euan for his hard work and leadership and to wish him the very best for the future.
“I would also like to thank Richard for stepping up to lead the organisation at this critical juncture. We will start the process to appoint a permanent successor and urgently reform our governance."
Pennycook added: "Our businesses continue to perform in line with the clear commercial plans put in place under Euan's leadership and I and the team will plot a steady course in the coming months."
