Lloyds Banking Group Plc (LLOY) Chief Executive Officer Antonio Horta-Osorio will return to work next month after nine weeks of medical leave and plans to delegate more duties to subordinates.
Horta-Osorio, 47, will return on Jan. 9 after an independent medical review of his health, London-based Lloyds said in a statement today. He has been on leave since Nov. 2 due to overwork and sleep deprivation, Chairman Win Bischoff said on a call with journalists. The board has accepted the Portuguese banker’s proposal that it “restructure and reduce his direct reporting lines in order to strengthen the accountabilities of his management team,” the statement said.
The bank announced in a separate statement issued 23 minutes later that it had picked Co-Operative Bank Plc, a customer-owned lender, as the preferred bidder for the 632 branches it’s selling to comply with European Union state-aid rules. Interim CEO and Finance Director Tim Tookey declined to give details on the size of Co-Op’s bid.
Since taking over from Eric Daniels on March 1, Horta- Osorio has announced 15,000 job cuts, a reorganization of the lender’s management structure and an increased focus on its U.K. core market. The bank said last month it may miss financial targets set in June given the poor state of the economy.
‘Micro-Management of Everything’
“His undoing was his micro-management of everything,” said Gary Greenwood, a banking analyst at Shore Capital in Liverpool. “We’ll have to wait and see” whether the new management structure works, he said.
Executives who could take on more responsibilities from the Portuguese CEO include Mark Fisher, group operations and integration director and Alison Brittain, who runs two of Lloyds’ biggest consumer banking units, Lloyds TSB and Bank of Scotland. David Roberts, the non-executive director who would have taken over if Horta-Osorio hadn’t returned, and incoming Chief Financial Officer George Culmer, may also take on additional duties.
If Horta-Osorio were to leave Britain’s second-biggest government-aided bank because of ill-health again, “I would consider my own position,” Bischoff said. “We don’t believe it will happen. Antonio realizes he can’t come back to business as usual.”
Lloyds shares lost 2.6 percent to 24.07 pence at the close of London trading for a market value of 16.6 billion pounds ($25.7 billion). They’ve slumped by 63 percent this year compared with a decline of about 36 percent in the Bloomberg Europe (BEBANKS) Banks and Financial Services Index.
Horta-Osorio successfully defended the lender against moves by the U.K.’s Independent Commission on Banking that would have forced the bank to sell more branches than demanded by the EU following the bank’s 20.3 billion-pound bailout. The ICB’s final report in September said the matter should be decided by the government.
Co-Op saw off a rival bid from NBNK Investments Plc (NBNK), run by former Lloyds of London Chairman Peter Levene, who had submitted a 1.5 billion pound offer for the outlets, a person familiar said last month.
“We will complete the transaction by the end of November 2013, in line with the European Commission mandated timescale,” Tookey said in a statement today. The bank hopes to reach a final decision by March 31, and Tookey said it would continue with plans for an initial public offering in tandem with the Co- Op talks.
The London-based bank holds more than a quarter of total British home loans and is 41 percent taxpayer-owned. Lloyds has to refinance about 23 billion pounds of bonds issued under the government’s Credit Guarantee Scheme which are to be repaid next year, Shailesh Raikundlia, a banking analyst at Espirito Santo Investment Bank, wrote in a note to investors on Dec. 8.
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