Lloyds Bank boss's illness shakes City confidence

Horta-Osorio takes time off suffering from fatigue but investors question whether he will return

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The Independent Online

The City was shaken yesterday after Lloyds Banking Group's chief executive, Antonio Horta-Osorio, took the rest of this year off on health grounds after eight months in the job.

Mr Horta-Osorio, who arrived at Lloyds from Santander UK amid much fanfare, is said to be suffering from extreme fatigue due to overwork. On strong medical advice, he has taken time off to recover.

Lloyds' finance director, Tim Tookey, will run Britain's biggest retail bank temporarily amid renewed market turmoil. Mr Tookey resigned from Lloyds in September, and is serving out his last few months.

Lloyds insisted yesterday that Mr Horta-Osorio, hailed as one of the top bankers of his generation, would be back at the helm by the new year. But the assurances failed to calm investors, who sent the shares down more than 4 per cent, making Lloyds the worst performer in the FTSE 100.

Some investors questioned whether Mr Horta-Osorio, who is 47, would ever return to the job.

A Lloyds shareholder, who chose to remain anonymous, said yesterday: "The whole thing is very unsatisfactory and I can see why people have said: 'I don't know what's going on and I'm going to sell.'

"I doubt he will be able to come back and run the business. If you can't cope with stress, you can't cope with it and to say he will be back by the end of the year is bizarre."

Mr Horta-Osorio has had a full in-tray since arriving at the part-nationalised bank in late February.

As well as setting out a new strategy and ordering 15,000 job cuts he has been trying to sell more than 600 branches under orders from the European Union and has been in negotiations with the Independent Commission on Banking.

Relaxed and charming in public, the Portuguese banker is said to be driven, demanding and obsessed by detail when it comes to business. Luring Mr Horta-Osorio from Santander was seen as a coup for Lloyds and the Government, which needs Lloyds to be rebuilt to have any chance of making a profit on its 41 per cent bailout stake.

The anonymous Lloyds shareholder said he expected the Government to act quickly to "parachute" a new boss in to Lloyds to fill a leadership vacuum. Despite being surplus to requirements, Mr Tookey was apparently the only choice to stand in after Mr Horta-Osorio ruthlessly jettisoned the bank's old guard soon after arriving.

Paul Mumford, a fund manager at Cavendish Asset Management, said: "If he is feeling the strain and feels he can't cope it may be a situation where they should find someone else. If he didn't come back it would be a bit of a disappointment but he has had time to do some reasonably sensible things and set a strategy."

Lloyds would have a problem finding a banker with a similar reputation to Mr Horta-Osorio, who made his name building Santander's UK business through a series of deals, including the purchase of Alliance & Leicester, and aggressive product launches.

Ian Gordon, a banking analyst at Evolution Securities, said that Mark Fisher, Lloyds' head of operations, could do the job because it was an unglamorous restructuring project that did not require a star banker.