Lloyds Banking Group poached its new boss from rival Santander today in a move seen as a major coup for the part-nationalised bank.
The appointment of the Spanish bank's UK boss, Antonio Horta-Osorio, received a warm welcome in the City as shares in Lloyds jumped 3%.
The highly-respected chief executive will join Lloyds on January 10 before taking on the top job on March 1, replacing American Eric Daniels. Lloyds is still 41% owned by the taxpayer, making the job one of the most significant in the UK as Lloyds continues its battle to return to health.
Mr Horta-Osorio, 46, is taking a "significant cut" in salary to take on the position, according to Lloyds.
But his pay package at Lloyds will be worth a potential £7.6 million excluding compensation in lieu of current benefits.
His replacement at Santander is widely expected to be named as Ana Patricia Botin - daughter of the bank's chairman - in a decision that would mark the first ever female chief executive of a major UK bank.
Santander declined to comment, but is expected to make an announcement within the next 24 hours.
Mr Horta-Osorio has been UK head at Santander since August 2006, overseeing the group's recent rapid expansion in the UK as it snapped up Bradford & Bingley's savings business and Alliance & Leicester.
The Portuguese banker said today he made the "emotional decision" to leave the Santander group after nearly 18 years for the "huge challenge" of the job and his love of the UK.
"I really like the UK and its culture and diversity," he said.
"This is the country my wife and I decided we wanted to see our children grow and wanted to stay here for the foreseeable future."
The incoming Lloyds chief has been offered the same basic salary and annual bonus as Mr Daniels - £1.03 million a year, with a possible £4.3 million windfall, or 225% of pay.
But his maximum long-term performance incentive has been set at a greater 420% of salary or £4.3 million should he meet "stretching" targets, while he will also get a £610,000 pension payment next year and an undisclosed amount in compensation for loss of shares and benefits accrued at Santander.
Last year he earned £3.4 million in basic salary and bonus at Santander, but has not revealed long-term share bonuses.
His appointment comes less than two months after Lloyds announced that Mr Daniels was planning to retire in a year's time.
Mr Daniels, 59, has come under fire following the bank's troubled rescue of Halifax Bank of Scotland at the height of the financial crisis.
He has been chief executive since June 2003. While he will step down from the post and the board on March 1, he will stay at the group until next September to ensure an orderly handover.
"I have known Antonio over the years and I'm pleased he has been appointed as my successor," said Mr Daniels.
His departure heralds a clean sweep at the top of the UK's major banks since the sector meltdown in 2008.
Barclays announced in September that investment banking head Bob Diamond would take over from John Varley as chief executive next year, while HSBC said on the same day that its executive chairman, Stephen Green, was leaving to join the Government as Trade Minister.
But the market will also watch with interest on news of Mr Horta-Osorio's replacement - seen as an important post in UK banking given that it is now Britain's third largest bank by deposits.
Ms Botin - chairwoman of Banco Espanol de Credito - has already been decided as its new UK head, according to a report in Spanish newspaper Expansion.
She is the daughter of Santander chairman Emilio Botin and is thought to be in the frame to eventually succeed Mr Botin.
The group entered the UK sector in 2004 when it bought the former Abbey National business.
Following the subsequent B&B and A&L deals, it has since rebranded under the Santander name in the UK and is soon to expand further as it ties up a deal to buy more than 300 branches from Royal Bank of Scotland.
Mr Horta-Osorio has worked at Santander since 1993, previously acting as chief executive of its Portuguese business and head of Santander Brazil.
He started his career at Citibank in Portugal as head of capital markets before working at Goldman Sachs in New York and London.
At Lloyds, he joins as the group is turning the corner after two years of devastating losses following the HBOS deal and financial crisis.
It said yesterday it was on track for full-year profits - its first since being bailed out by the Government - after a good third quarter.
Lloyds, which owns Halifax and Cheltenham & Gloucester, surprised the market earlier this year with better-than-expected interim profits of £1.6 billion.
But there are concerns over its vulnerability to housing market shocks and borrower woes amid the Government's spending cuts.
Analysts said Mr Horta-Osorio's appointment was positive for Lloyds, in view of Santander's strong UK performance in recent years.
Mr Horta-Osorio remained tight-lipped on his plans for the group, but said he wanted to "take the bank to the next stage in the UK and focus on that relentlessly for the next five years" before considering international expansion.