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Lloyds CEO Eric Daniels to Step Down Within 12 Months

loyds Banking Group Plc said group chief executive Eric Daniels has informed the board of his
intention to retire in a year. Source:Lloyds Banking Group via Bloomberg
loyds Banking Group Plc said group chief executive Eric Daniels has informed the board of his intention to retire in a year. Source:Lloyds Banking Group via Bloomberg

Sept. 20 (Bloomberg) -- Lloyds Banking Group Plc Chief Executive Officer Eric Daniels said he will step down in the next 12 months, the third top British banking executive to leave in as many weeks.

Lloyds will form a committee headed by Chairman Win Bischoff to consider internal and external candidates from the U.K. and overseas to replace him, the London-based lender said in a statement today. The most likely successors include Nationwide CEO Graham Beale and HSBC Holdings Plc Chief Financial Officer, Douglas Flint, according to BGC Partners Inc.

Daniels, 59, led Lloyds’ takeover of HBOS Plc in September 2008, a purchase that forced the lender to seek a 17 billion-pound ($27 billion) bailout that left the government with a 41 percent stake in the bank. Lloyds is the third of Britain’s four biggest banks to announce a change in leadership after Barclays Plc CEO John Varley and HSBC Chairman Stephen Green said they would step down this month.

“Shareholders may view Eric Daniels as responsible for the HBOS acquisition,” said Shailesh Raikundlia, a London-based analyst at MF Global Securities Ltd. with a “sell” rating on the stock. “They’re looking for a clean slate.”

The shares jumped 2.8 percent to 77.41 pence as of the 4.30 p.m. close of trading in London today, valuing the company at 52.8 billion pounds. The shares have gained 52 percent this year, making them the second-best performing U.K. bank stock after Royal Bank of Scotland Group Plc.

No ‘Lame Duck’

The stock is still down 9 percent from when Daniels became CEO in June 2003. He will remain as CEO until a successor is found, Bischoff, 69, told reporters on a conference call today.

“We don’t have any shortlist yet, this is obviously very recent,” he said. “There is no question of a lame duck.”

The HBOS purchase, brokered by Gordon Brown’s government at the height of the credit crisis, was Daniels’s biggest. All of his previous acquisitions were valued at less than $250 million, according to Bloomberg data.

HBOS racked up 20 billion pounds of losses in 2009 alone, pushing Lloyds into a loss. Lloyds used 11.5 billion pounds of the government bailout to prop up HBOS. Last month, Lloyds reported a profit for the first time since the HBOS purchase, posting a proforma pretax profit of 1.6 billion pounds in the six months to June.

Daniels said today he was “very pleased” with the HBOS purchase, which made Lloyds one of the world’s 10 biggest banks.

‘Momentum Going Forward’

“Shareholders and the taxpayer will do very, very well with their investment in Lloyds,” Daniels told reporters. “Clearly we have strong momentum going forward.”

Lloyds may now have as much as 9 billion pounds in surplus capital, according to analysts at UBS AG. The lender raised 13.5 billion pounds in the U.K.’s largest rights offering last year and international regulators this month gave banks more time than expected to comply with stiffer capital requirements.

A U.K. government-sponsored commission this week begins taking evidence in its inquiry into the structure of banking. It will examine whether lenders’ consumer operations should be separated from their investment banks to reduce the likelihood of a repeat of the financial crisis. The committee will also seek to promote competition in consumer and investment banking to benefit consumers and businesses, according to the Treasury.

“There is a huge amount of unfinished business,” Daniels said. “We still have a large integration to finish off,” he added. “Until it is done it is going to require a lot of time and attention.”


Montana-born Daniels joined Citibank in 1975 and worked in the U.S., South America and Europe before becoming chief operating officer of Citibank Consumer Bank in 1998. He joined Lloyds in 2001 as head of U.K. retail banking.

Daniels was paid 1.12 million pounds last year, including a salary of 1 million pounds, according to the bank’s annual report. He waived his bonus for the year.

Lloyds hired JCA Group, a London-based recruitment firm, in March to draw up a list of candidates to replace Daniels, a person familiar with the situation said at the time.

David Buik, a market analyst at BGC, gave Beale, who heads the U.K.’s biggest customer-owned lender, and HSBC’s Flint the shortest odds on succeeding Daniels at 3-1. Other candidates include Stuart Gulliver, head of HSBC’s investment bank, Frits Seegers, Barclays’s former consumer banking chief, and Gordon Nixon, the CEO of Royal Bank of Canada, according to Buik.

HSBC’s Flint and Gulliver declined to comment through spokesman Adrian Russell. A spokeswoman for Nationwide was not immediately available to comment.

To contact the reporters on this story: Andrew MacAskill in London at

To contact the editor responsible for this story: Edward Evans at

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