City underwhelmed as American takes the helm at Lloyds TSB

Lloyds TSB has named Eric Daniels, the American who heads up its retail business, as the successor to Peter Ellwood, the chief executive of the Big Four bank who will retire next May.

Mr Daniels, a veteran of the US banking giant Citigroup before he joined Lloyds last November, has been thought of as a likely successor to Mr Ellwood for some time. Lloyds' shares rose 14.5p to 450p on the announcement but City observers had mixed feelings about the move. His appointment disappointed some in the market who wanted Britain's third largest bank to bring in an external candidate to try to breathe life into its faltering growth rates and strategy.

One analyst said: "He keeps a low profile so people don't really know what he will be like. But Lloyds needs someone to come in and think seriously about how to take the bank forward and how to start growing revenue."

The bank gave another hint yesterday that it has moved away from the strategy under Mr Ellwood, who made a major deal with a Continental bank one of his highest priorities.

Lloyds has had talks with various European partners, including Deutsche Bank, in the five years Mr Ellwood has been in charge but it has not been able to tie up a deal.

Maarten van den Bergh, the chairman of Lloyds, said: "A year ago I was quite confident that there would be mergers and acquisitions in the industry, but I think that will take much more time now as they try to solve their own problems. Organic growth is the first priority, but we will always look for attractive merger opportunities."

Mr Daniels, 51, is expected to be paid about £1m or more when he accedes to the top job on 31 May.

Mr Daniels, whose hobbies include fly-fishing and collecting Japanese art, was a surprise addition to Lloyds' board last year because he was recruited from a role running Zona Financiera, a South American dot.com.

Mr Daniels said he was "proud" of his decision to move to the company from Citigroup saying: "My wife and I took a decision that after 15 years with Citigroup there really were not too many mountains to climb. I thought that running a dot.com, especially in Latin America, would be great fun."

The business faltered and then collapsed along with many other dot.com companies in 2001, a year and a half after Mr Daniels joined.

His career was more conventional before that, when he worked his way up the Citigroup empire to become chief executive of its Travelers life & annuity arm.

Mr Daniels, now one of the most senior members of Lloyds' board, is widely thought to have a done a good job running the branches, current accounts and mortgages business. But he is under pressure to put his foot on the accelerator for growth, after a period under Mr Ellwood which many analysts think has been lacklustre.

Mr Ellwood replaced Sir Brian Pitman, who transformed Lloyds into a retail banking powerhouse of the 1980s and 1990s.

Mr Ellwood, who said he would step down when he turns 60 next year, retires on a pension of £336,000 a year. Last year his pay was increased 17 per cent to £1m.

Mr Daniels' role in charge of the retail bank will be taken up by Peter Ayliffe, currently head of personal banking. Mr Ayliffe will join the main board.