Turmoil at Lloyds over 'interim' management

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The Independent Online

Lloyds Banking Group was thrown into further turmoil yesterday as the state-backed bank announced contingency plans to replace its absent chief executive, and one of his new recruits decided to remain at Royal Bank of Scotland.

Lloyds said Antonio Horta-Osorio, who is on leave recovering from exhaustion, was due back in the next few weeks but if his return was delayed then David Roberts, a former Barclays banker now on the Lloyds board, would take over as interim chief executive.

Sir Win Bischoff, the Lloyds chairman, said: "The board is pleased that Antonio is making good progress and we are looking forward to his return at the end of the year. However, we recognise it is important that we formalise the contingency arrangements if Antonio's return is delayed."

Some investors had called for the bank to come up with a succession plan but the announcement failed to calm concerns. Although Lloyds has given Mr Horta-Osorio until the end of the year to come back, a decision will have to be taken before then.

RBS added to Lloyds' woes yesterday by announcing that Nathan Bostock, one of Mr Horta-Osorio's prize hires who was working out his notice at RBS, had changed his mind and elected to stay put. To cap a day of surprises, Lloyds was forced to unveil its likely new finance director earlier than intended when RSA, the insurer, said its chief financial officer, George Culmer, had quit to join the bank.

The news of Mr Culmer's appointment did not support Lloyds' shares, which closed down 7 per cent at 23.42p. One shareholder said: "The whole thing is a shambles. It sounds sensible to put in place somebody in case Horta-Osorio doesn't come back but it doesn't help that there are so many moving parts. So many of the management seem to be coming and going or not coming and going after all. It doesn't appear a stable ship."

Mr Bostock, a former close colleague of Mr Horta-Osorio at Santander UK, was recruited to run wholesale banking at Lloyds.

David Roberts ran retail and business banking at Barclays and was tipped as a rival to John Varley and Bob Diamond in the race for the top job in 2003. He moved on to run Austria'ssecond-biggest retail bank, Bawag.