Investors urge Lloyds to sack Andy Hornby

By Margareta Pagano,Business Editor
Sunday 01 February 2009 01:00

Investors are calling for Lloyds Banking Group to bring forward its financial results amid growing disquiet that Andy Hornby is still drawing £60,000 a month as a consultant four months after the emergency takeover of HBOS.

A number of big investors are urging Sir Victor Blank, the chairman, and Eric Daniels, his chief executive, "to do a Barclays". They want Lloyds to give a full picture of the bank's toxic assets, rising bad debts and capital adequacy ratios. Lloyds, they claim, has done nothing to reassure them about the exposure of HBOS to the commercial lending and property market to which it was heavily exposed.

Marcus Agius, the chairman of Barclays, was forced into writing to shareholders on Monday to reassure them that the bank was "well funded and profitable" after a halving of the share price in a week. In another bid to calm the markets, Barclays also agreed to bring its results forward by a week so that investors can be given the detailed account of last year's trading as soon as possible.

Investors want Lloyds to bring forward its full-year results, due on 27 February. However, sources close to the bank said that its auditors are working flat out on the accounts and it is unlikely they can be completed soon enough to bring them forward in any meaningful way. When it reports, it will announce the appointment of two new non-executive directors.

One of the fears hanging over Lloyds has been the need for capital. But this was dismissed by a Citigroup report which said it may need £3bn at most, helping to push the shares up to 90p.

A number of big investors, including Legal & General, are also said to be growing impatient over decision by Lloyds to keep Mr Hornby on as a consultant after the merger. Several said they want him to be sacked. He was forced to leave the HBOS board, along with its chairman, Lord Stevenson, following the merger but was taken on by Lloyds to help advise on the hundreds of branch closures and thousands of job losses.

Mr Hornby's contract, which started in November, is open-ended so there would be no pay-off. But one Lloyds shareholder said: "So far, Lloyds has told us absolutely nothing about the real position of HBOS. I simply don't understand why Hornby is still working at Lloyds for so much money. Much of what went wrong at HBOS was brought about by his policies. It is an outrage when people have lost so much money."

Investors say the Government, which owns 43 per cent of Lloyds after the bailout, should also put pressure on the bank to end Hornby's contract. "It's an insult to all the small investors who have lost a fortune at Lloyds; to the taxpayers who are now indirectly funding the bank and the thousands who will lose their jobs through the merger," said another shareholder.

Lord Mandelson, the Secretary of State at the Department for Business, Enterprise and Regulatory Reform, is aware of the unrest. However, it is understood that he does not feel compelled to push for Mr Hornby's departure.

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