Lloyds boss Antonio Horta-Osorio: 'We're not such a big bank as people think'

The chief executive contends that Lloyds is not too mighty and its bonus culture makes sense. Many may beg to differ

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'.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent