Lloyds Banking Group named Antonio Horta-Osorio, the head of Santander in the UK, as the successor to outgoing chief executive Eric Daniels yesterday. Santander was quick to line up Ana Patricia Botin, the daughter of the Spanish group's chairman, Emilio Botin, to replace him.
Lloyds' appointment of the Portuguese banker came as a surprise as it emerged the day after the part-nationalised bank released a trading update, when no suggestion Mr Daniels' replacement had been found. Mr Horta-Osorio joins Lloyds early next year and takes over as chief executive from 1 March.
Sir Win Bischoff, chairman of Lloyds, said Mr Horta-Osorio "stood out in an excellent shortlist of potential candidates for this position". He also backed the new hire's experience and understanding of the UK retail and commercial banking market.
It is understood that Mr Horta-Osorio has been talking to Lloyds over the past few weeks, and informed his current employers of his decision to leave at the weekend. One banking source said: "Santander tried hard to keep hold of him, but despite his affection for the group, the challenge of Lloyds was too great to pass up."
Mr Horta-Osorio said: "I am conscious of the vitally important role the group plays in the UK's social and economic fabric. Lloyds is a key player in the UK economy and is instrumental in supporting the future growth and prosperity of the country."
The bank revealed he could receive a remuneration package of more than £8m next year. His annual salary is set at £1.03m, with a bonus of more than double that if the bank hits targets. Next year he will also receive a long-term performance-based incentive scheme that could be worth more than four times his salary. Mr Horta-Osorio will also be handed a £610,000 cash allowance to fund personal pension arrangements.
The Portuguese banker's bonus will also have his bonus linked to small businesses lending targets, after last-minute demands made by George Osborne.
He was told at a meeting with the Chancellor last week that part of his £8.3m potential pay package will depend on him boosting business lending. Mr Osborne was unable to insert a specific lending target into Mr Horta-Osório's contract, but he secured an agreement that a target would be set.
Though Mr Horta-Osorio is thought to be taking a pay cut to move to Lloyds, the package is bound to cause some controversy, given the sizeable stake the British taxpayer owns in Lloyds. Sensitive to such criticism, Treasury sources sought to emphasis his credentials yesterday.
His appointment was also welcomed by analysts, who backed the incoming chief executive's record at Santander in the UK. Ian Gordon, of Exane BNP Paribas, said the appointment of Mr Horta-Osorio was a "perfect choice".
The scuba diving enthusiast joined Santander in 1993 as chief executive of Banco Santander de Negocios Portugal after stints at Goldman Sachs in New York and London and Citibank. In 2004, he moved to the UK to take up the role as non-executive director of Abbey, the same year the Spanish group secured a deal to buy the former building society. He has headed up UK operations of the Spanish bank since 2006, overseeing Santander's subsequent takeover of Alliance & Leicester, the savings operation of Bradford & Bingley and branches from Royal Bank of Scotland.
Lloyds said in its statement yesterday: "He has led the successful expansion of the Santander Group in the UK through strong organic growth." A source close to Mr Horta-Osorio said that "after a five-year transformation of Santander's operations in the UK, this is a natural point to move on".
High stakes Botin
* Santander reacted quickly to the news that Antonio Horta-Osorio was to jump ship in the new year. It emerged that the daughter of group chairman Emilio Botin, head of Spain's premier banking family, was to be parachuted into the UK.
Ms Botin currently runs the group's Banesto subsidiary in Spain, and many have pencilled her in as her father's eventual successor. While some have suggested she lacks enough experience for the group role, the handling of Santander's UK operations as well as next year's partial flotation of the division could act as indicators. Don Emilio, as her father is said to be called within the group, still seems as sprightly as ever, though. He has spearheaded the group's vast expansion over the past decade, taking Santander from a provincial bank to outstrip its domestic rival BBVA. Analysts have said in the past that Mr Botin, the third generation of a Cantabrian banking family, has defined Santander with his strength of personality. The new head of UK operations could well define the future.Reuse content