Lloyds Banking Group PLC (LON:LLOY) revealed on Monday that its chief executive António Horta-Osório plans to depart the lender next year, as it also unveiled the appointment of Robin Budenberg as its new chairman.
The FTSE 100-listed group said Horta-Osório is looking to step down in 2021 when he will have delivered three strategic plans and completed 10 years in the role. He has agreed to leave around June to ensure a smooth transition as the bank weathers the coronavirus crisis, it added.
In the same announcement, Lloyds said that Budenberg will join its board on October 1, 2020, and take over as chair in early 2021 to replace Lord Blackwell, who announced his retirement last year.
Budenberg currently holds the same role at independent advisory firm Centerview Partners and property management company The Crown Estate, while he is also on the boards of social investment watchdog Big Society Trust and ethical bank Charity Bank. He will step down from all roles but will remain chairman at The Crown Estate when joining Lloyds.
He previous held senior positions at SG Warburg/UBS Investment Bank, and was appointed as chief executive, and then chairman, of UK Financial Investments with responsibility for managing the UK Government's investment in UK banks, including Lloyds.
Budenberg's compensation will remain unchanged from that of the current chairman, at £772,850 per annum.
In a statement, Lord Blackwell commented: “I am delighted to welcome Robin Budenberg to the Board as my successor. His knowledge of the Group combined with his broad experience in both financial services and other strategic advisory roles give him an outstanding background to provide the Board leadership required to support the continued transformation of the Group."
He added: "I would also like to take this opportunity to pay tribute to the outstanding contribution that António Horta-Osório has made to first turning round and then leading the strategic development of the group over the last decade.
“During his tenure, he has overseen a comprehensive transformation of the group's balance sheet, operations, and customer propositions, including the repayment of the UK Government's £21bn investment and evolution of the Group into the UK's largest digital bank.”
Lloyds shares rose 0.6% to 31.83p on Monday morning.
Changing of the guard
AJ Bell investment director Russ Mould commented: “The changing of the guard at Lloyds has been welcomed by the market, judging by the bank’s share price going up on the news. A new chairman and chief executive will provide the opportunity to sharpen Lloyds’ proposition for the modern world.
“António Horta-Osório’s legacy is one of stabilising the business following the global financial crisis, returning it to private ownership and reintroducing the dividends much loved by shareholders. Sadly, his resignation comes at a disappointing time for the bank, suggesting his legacy might not be strong as he hoped."
Mould added: “Lloyds has had to stop paying dividends again, albeit in line with its peers during the pandemic, and the share price is floating around lows not seen since 2012. Admittedly these issues aren’t his fault, but in years to come people will look back and associate Horta-Osório’s departure with darker times.
“Horta-Osório currently has 9.4 years’ service, compared to the average of 5.4 years for the incumbent FTSE 100 chief executives. However, he’s only the fourteenth longest serving boss in the index. Simon Wolfson at Next has the top slot at 19.2 years, followed by Tim Steiner at Ocado with 18.5 years in the job.
“Lloyds claims to be the UK’s largest digital bank but whoever replaces Horta-Osório will no doubt look at how technology can play a much greater role in the business. Lloyds still has a large workforce and is encumbered by clunky legacy systems and too much bureaucracy making it hard to get anything done quickly.
“Turning the bank into a more efficient machine could work wonders for customers and profits, but the challenge is so great that results won’t happen overnight.”
-- Adds analyst comment, updates share price --