Europe News

Lloyds Chief Is Having to Apply For Own Job

Patrick Jenkins, Financial Times

Lloyds Banking Group’s chief executive António Horta-Osório is having to reapply for his own job as doctors prepare to give him the go-ahead to return to work from sick leave.

Sharon Lorimer

The bank is set to hold a board meeting next Thursday at which it will decide whether Mr Horta-Osório, who went on medical leave on grounds of stress in early November, can credibly return to work.

Two people close to the situation said the chief executive was going through such a thorough vetting process that he was in effect having to reapply for his own job. “Investors are sceptical about his ability to return,” said one. “To go with António would be a pretty brave decision.”

Sir Win Bischoff, the bank’s chairman who has been a staunch supporter of Mr Horta-Osório, has been consulting investors. “As you can imagine, Win has been bombarded by every shareholder imaginable,” said a person close to the process. “That will have coloured his views.”

Shareholders have expressed serious doubt about whether the Portuguese banker, whose stress is said to have been triggered in part by his micromanagement style, should be allowed to return. The Lloyds’ board has appointed its own medical adviser who has been liaising with Mr Horta-Osório and with his doctors. The adviser is expected to report on Mr Horta-Osório’s state of health ahead of next week’s board meeting.

People close to the process say the board has yet to make up its mind on whether to give the go-ahead for the chief executive to return. Several board members have met Mr Horta-Osório in recent days. The rest are expected to do so next week.

If he does return, Mr Horta-Osório will have to change his way of working. The board is planning to change the governance structure around the chief executive, introducing a new role of chief operating officer or chief of staff.

David Roberts, who is set to take over from Mr Horta-Osório as a stand-in chief executive if his leave extends into January, is a potential candidate for the role. So, too, is Mark Fisher, who is in charge of integrating Lloyds’ HBOS acquisition.

The overhaul of the bank’s governance structure would strengthen an inner circle of senior directors from among Mr Horta-Osório’s 12-strong group executive committee.

Lloyds may announce its decision as soon as next Thursday.

The bank is also expected to declare the winning bidder in the battle to buy a network of 632 branches that it is being forced by European Union competition authorities to divest as a penalty for its government bail-out.

Lloyds, 41 percent owned by taxpayers, is considering bids from Co-operative Bank, the favourite, and Lord Levene’s NBNK, a cash shell.