Antonio Horta-Osorio doesn't fear competition. Nor, it seems, does he fear competition inquiries.
The chief executive of Lloyds Banking Group has led the lender out of the sick bay after three years at the helm. Now he is turning his thoughts to growth. But for the company that was spliced together with HBOS in the depths of the financial crisis – with the then prime minister Gordon Brown waiving conventional competition rules – there is a fine line between market leader and dominant force.
That fine line is demonstrated by Ed Miliband's call to cap the size of banks in an attempt to foster greater competition. Could Labour winning the general election next year slow Lloyds on the path from £20bn state bailout to money-making machine? Hair slicked back, a light tan and leaning over earnestly in one of Lloyds' numerous beige meeting rooms in its Square Mile base, Mr Horta-Osorio is unruffled by the thought – particularly because the industry is still in the throes of restructuring to meet European state aid rules.
"We are not such a big bank as people might think," the Portuguese banker says, fixing me with a firm stare. "We will have 25 per cent of the current account market after [hiving off] TSB, similar in savings and mortgages. We have half that market share in many segments: credit cards, personal loans, car financing –insurance as well. I have always said I think the retail market is very competitive when you compare it to Europe. There are several studies that demonstrate prices are lowest in Britain."
Will that square with politicians fixated on the 80 per cent of the current account market that resides with four players – Lloyds, Barclays, HSBC and Royal Bank of Scotland – and will it address the frustrations of small-business borrowers?
"I think that Labour wants to see more challenger banks in the market, which I understand... with TSB being a totally independent bank as we do the stock market listing and Williams & Glyn [an RBS spinout] coming to market, I think the structure [of the market] will be much more competitive in the next two or three years," he said.
Mr Horta-Osorio's aim to bulk up Lloyds in new areas is cross-selling by another name. But he wants to swap the push of an incentive-driven culture – exposed by a £28m fine for dubious sales tactics where branch staff were offered "grand in your hand" bonuses – with the pull of offering better value by sharing cost savings around between customers and shareholders. One area he is focused on is small and medium-sized enterprises (SMEs), where Lloyds is increasing lending by £1bn a year. "[Competition] is less intense in the SME space – clients are single-bank so it is less easy to compare. There is work to do in the SME space but that will require client behaviour to change."
It's a smooth vision for the future of an industry still caught in the angry glare of the public. You would expect nothing less from Mr Horta-Osorio, who has done his best to glide above the latest bonus row.
This week's annual report confirmed he bagged a £1.7m bonus for the year, which some think should have waited until after Lloyds, still 33 per cent taxpayer-owned, had returned to paying a dividend. In addition, Mr Horta-Osorio will benefit from a £900,000 shares "allowance" – part of bankers' efforts to dodge rules on capping bonuses.
"I think most of remuneration should be paid in shares so that management has a joint incentive with shareholders," he said.
His bonus is deferred until 2019 but some observers, notably Andrew Tyrie on the Treasury Select Committee, think that a decade would be more appropriate. Where Lloyds has led in some areas – such as pledging to add close to 1,000 extra women to its top tier of 8,000 managers by 2020 – Mr Horta-Osorio wants to be a "follower" on this matter.
"I think we will see how things evolve. We will take decisions then but we have already taken the lead in going to five years," he added. And could he wait for 10 years to pick up his money? "I don't intend to leave," he said with a laugh.
Mr Horta-Osorio spent much of his career on the move before coming to Britain eight years ago to lead the UK operation of the Spanish bank Santander. His family is testament to his globetrotting career, with two daughters, aged 22 and 18, born in New York and Portugal, while his son, aged 15, arrived when the family was based in Sao Paulo.
The competitive streak of the 50-year-old, who speaks six languages, is betrayed by his leisure pursuits. Take your pick from scuba diving with sharks, learning to play tennis left-handed after injuring his right wrist –before swapping back again two years later – and the fact that his favourite read is The Art of War by Sun Tzu.
One of his toughest challenges was to bounce back from six weeks of high-profile sick leave. Less than a year after being poached from Santander to lead the Lloyds revival, Mr Horta-Osorio was diagnosed with sleep deprivation. When he returned, Sir Win Bischoff, Lloyds' chairman, talked about the need to move from "management to leadership" – something that he believes he has now done.
"As you move out of the storm and the boat is driving in calmer seas, the captain should decentralise more – should focus himself more on leadership and growing his own team," he said. "You have to be able to adapt your leadership style to fine-tuning between the internal situation of company and the external environment."
So as choppy as it gets, Mr Horta-Osorio believes he has weathered the worst.
Lloyds by numbers
£1.7m The chief executive's annual bonus.
£0.9m The size of his shares 'allowance'.