Lloyds re­cov­ery not enough to stop sharks cir­cling round Horta-Osorio

The lender’s de­part­ing chief ex­ec­u­tive will leave a mixed legacy be­hind him, writes Lucy Bur­ton

The Daily Telegraph - Business - - Business -

An­to­nio Horta-Osorio is no stranger to risk. The Por­tuguese banker takes breaks from run­ning one of Bri­tain’s big­gest lenders by swim­ming with sharks.

“Sharks are not dan­ger­ous. There are many more dan­ger­ous ‘sharks’ in other places,” he said shortly af­ter he be­came the boss of bailed-out Lloyds Bank­ing Group in 2011.

The banker had just taken a pe­riod of leave fol­low­ing stress-in­duced in­som­nia, and was dis­cussing his fond­ness for shark div­ing – some­thing he has done more than 100 times, in­clud­ing with three great whites in South Africa one Christ­mas. The 56-year-old, who has an­nounced he will step down from the top job next sum­mer, was right to pre­dict that shark swim­ming would re­main low on his list of hair-rais­ing mo­ments.

Tougher chal­lenges lay ahead, no­tably steering the bank back into pri­vate hands in 2017 fol­low­ing its £21bn tax­payer bailout at the height of the 2008 fi­nan­cial crash, and more re­cently deal­ing with the eco­nomic fall­out of Covid-19.

As the multi-mil­lion­aire now pre­pares to move on from Lloyds, months af­ter sources told The Daily Tele­graph the bank had stepped up its prepa­ra­tions for his exit, he will no doubt look back on a chal­leng­ing decade that made him one of the best-known chief ex­ec­u­tives in Bri­tain and earned him just un­der £60m. It has been far from easy. As Michael Hew­son, the CMC Mar­kets an­a­lyst, puts it, Horta-Osorio has spent the last 10 years re­viv­ing a “bas­ket case” busi­ness and re­turn­ing it to profit against a back­drop of low in­ter­est rates, Brexit un­cer­tainty and a slug­gish UK econ­omy. There have also been some high-pro­file scan­dals that have cost vast sums of money and rocked the bank’s rep­u­ta­tion. These in­cluded Bri­tain’s big­gest ever bank fraud, which took place at Lloyds’ HBOS Read­ing branch. Although the scan­dal hap­pened be­fore Lloyds’ dis­as­trous takeover of HBOS in 2008, the bank’s bosses have been lam­basted by vic­tims for its han­dling of the saga. Hor­taO­so­rio apol­o­gised in De­cem­ber af­ter ma­jor flaws were found in a com­pen­sa­tion scheme for vic­tims, while TV pre­sen­ter Noel Ed­monds, who claims HBOS Read­ing de­stroyed his busi­ness, has ac­cused the bank’s bosses of play­ing “jail or no jail”.

Ri­val banks will also find it hard to for­get Horta-Osorio’s de­ci­sion in 2011 to put aside £3.2bn to cover the costs of mis-sold PPI, open­ing the flood­gates for claims at a time when Lloyds’ peers were fight­ing with the reg­u­la­tor over the pay­outs.

Lloyds’ ini­tial £3.2bn pro­vi­sion, an amount that stunned the City at the time, went on to look mi­cro­scopic. The scan­dal ended up cost­ing the bank a vast £20bn in com­pen­sa­tion, while UK banks in to­tal footed a bill of around £50bn, five times the cost of the Lon­don 2012 Olympics. The coro­n­avirus pan­demic came and wiped out any hopes of a post-PPI profit boost, just months af­ter the mis-sell­ing saga fi­nally came to an end.

A third scan­dal that led to wide­spread neg­a­tive pub­lic­ity for the bank was much closer to home.

Horta-Osorio’s al­leged ex­tra­mar­i­tal af­fair with Tony Blair’s for­mer ad­viser Wendy Pi­att while on a busi­ness trip in 2016 led him to apol­o­gise to the bank’s 75,000 staff for the bad pub­lic­ity, af­ter a re­port claimed he spent more than £3,000 in a five-star ho­tel with his al­leged lover, in­clud­ing £550 on the ho­tel spa.

“I have al­ways said we must recog­nise that mis­takes will be made… The im­por­tant point be­ing how we learn from those mis­takes and the de­ci­sions and ac­tions we take af­ter­ward,” the memo read.

The bank, dubbed “Lloyds Bonk” in sto­ries about the fling at the time, later said it found no breach of pol­icy and that he had not claimed ex­penses for per­sonal ex­pen­di­ture.

Other chal­lenges un­der Hor­taO­so­rio’s watch have in­cluded steep cost cuts, re­dun­dan­cies and branch clo­sures, as well as a costly le­gal bust-up with Standard Life Aberdeen last year over a £100bn fund man­age­ment man­date. Although he has suc­cess­fully turned around a bank left reel­ing from the 2008 fi­nan­cial cri­sis, who­ever takes over will find them­selves faced with a whole new set of prob­lems as they nav­i­gate the lender through the af­ter­math of the coro­n­avirus pan­demic and Brexit. Its share price is lower than it has been in years and div­i­dends are on ice.

In an in­ter­nal memo an­nounc­ing his exit yes­ter­day, Horta-Osorio thanked staff for sup­port­ing him “through good times and bad” over the years. “This has, quite sim­ply, been the job of a life­time,” he said.

Lloyds boss An­to­nio Horta-Osorio will step down in 2021

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.