‘Fatigued’, job-cutting Lloyds boss takes a break
LONDON, Nov 2 – Lloyds’ energetic, job-cutting chief executive Antonio Horta-Osorio is taking a break due to ill-health, the state-rescued British bank said today in a statement that came so suddenly his replacement was named only hours later.
Tim Tookey, the finance director who is due to leave early next year as part of a sweeping clearout of the bank’s old guard, will take over until the 47 year-old boss’s return, Britain’s biggest retail bank said.
Portuguese-born Horta-Osorio has embarked on a plan to cut some 15,000 jobs to get crisis-hit Lloyds back on track since he took over as CEO in March.
“Following medical advice António Horta-Osório is taking a temporary leave of absence from his duties as group chief executive ... António is expected to return to his position before the end of the year,” it said.
Lloyds shares were down by 4.4 per cent at 29.2 pence in midmorning trade, making the stock the worst performer on Britain’s benchmark FTSE 100 index , which was up by 0.15 per cent.
One Portuguese recent newspaper interview with the former Santander executive described him as “the Mourinho of the finance world”, a reference to the mercurial manager of Spanish football club, Real Madrid, and told of how when he broke his right wrist he learnt to play tennis with his left.
A Lloyds employee recently described Horta-Osorio as “intense and scary”, and he has enjoyed broad shareholder support for his actions.
“Investors thought that Horta-Osorio had the right strategy to turn Lloyds around,” said SVM Asset Management fund manager Colin McLean.
“However, investors would be reassured if his leave proves to be only a temporary and brief one,” added McLean, whose firm holds Lloyds shares.
Lloyds, which is some 40 per cent owned by the British government after a state-led bailout during the 2008 credit crisis, added it would discuss interim measures on who would assume Horta-Osorio’s functions at a board meeting today.
Horta-Osorio took over as chief executive eight months ago after joining the group from Spanish-owned rival Santander UK at the end of last year.
Since arriving at Lloyds he has quickly embarked on a restructuring programme which has entailed plans to axe some 15,000 jobs, halve Lloyds’ international presence and sell off some 630 retail bank branches.
His arrival has also seen the departure of Lloyds executives who were associated with the previous management led by former CEO Eric Daniels.
In September Lloyds announced that Tookey would leave in early 2012, while former Lloyds retail banking head Helen Weir and insurance head Archie Kane have also stepped down.
A source with knowledge of the matter said that Horta-Osorio’s workload had brought on his illness.
“He’s been suffering from fatigue due to over-work,” said the source.
Cavendish Asset Management fund manager Paul Mumford, who also holds Lloyds shares, agreed that news of Horta-Osorio’s sick leave was disappointing for shareholders.
“He’s got Lloyds back on the right track,” he said.
Horta-Osorio’s strategy update, announced in June, stated that he planned to have cut costs by some £1.5 billion (RM7.52 billion) a year by 2014, and boost the bank’s performance by cutting through middle management to make it more agile.
Horta-Osorio aims to cut Lloyds’ international presence to fewer than 15 countries from 30 now in order to focus more on domestic retail banking, where it is market leader and has historically been far more significant than its presence overseas.
Lloyds has also said it intends to decide by the end of the year on either a sale or spin-off of the 630 branches which it has been ordered to sell by regulators as payback for a state rescue package during the credit crisis. The Portuguese-born banker’s hobbies including swimming with sharks and scuba diving as well as tennis.
A graduate of management and business from Universidade Catolica Portuguesa and with an MBA from business school INSEAD, Horta-Osorio started his career at CitiBank in Portugal, where he became head of capital market for Portugal. He worked for Goldman Sachs for two years in New York and London, focusing on corporate finance activities in Portugal.
He joined Santander in 1993, and ran operations in Portugual and Brazil before arriving in Britain, just after squeezing in an advanced management programme (AMP) at Harvard, an 8-week intensive course for senior managers.
Britain ended up with stakes of around 40 per cent in Lloyds and 83 per cent in Royal Bank of Scotland after rescuing both during the original banking crisis with taxpayer bailouts, and RBS has also been told to sell off a host of assets.
Lloyds has been dogged by a legacy of bad debts from its government-brokered acquisition of troubled rival HBOS during the credit crisis, and its shares have consistently traded well below the 63.1 pence average price at which the British taxpayer acquired its stake in the bank. – Reuters