Higgins out and Ellis returns in HBOS shuffle

Published on Saturday 11 August 2007 00:34

HBOS yesterday unveiled a surprise boardroom shake-up that has left its £1 million-a-year head of retail, Benny Higgins, without a role to play at the banking giant.

Andy Hornby, who has moved quickly to stamp his authority on the group since becoming chief executive last summer, is to split the retail division in two.

Jo Dawson, chief executive of insurance and investment, will take responsibility for distribution, while Dan Watkins, currently group risk director and a member of the executive committee, joins the board as head of retail products.

The Edinburgh-based bank also announced that finance director Phil Hodkinson is to retire in April next year, when he turns 50. In a shock move, he will replaced by former incumbent Mike Ellis, 56, who retired at the end of 2005 after serving 17 years with Halifax and HBOS.

Hornby has also decided to recreate the position of chief operating officer, a role that he occupied before being promoted to lead the company. Philip Gore-Randall, a director and former COO of Aon UK, has been taken on in the post.

Higgins, who was poached from rival Royal Bank of Scotland just over a year ago, felt there was "no role within the new structure that would satisfy my ambition". He told The Scotsman: "I have decided to satisfy that elsewhere."

He would give no indication of his plans after leaving HBOS at the end of the year.

Higgins joined RBS ten years ago after leaving his position at insurance giant Standard Life for personal reasons, which have never been explained.

According to HBOS's latest annual report, Higgins received more than 1m in 2006, made up of basic salary, pension contributions and a cash incentive.

Hornby played down speculation that Higgins had paid the penalty for a lacklustre half-year for the retail division, where first-half underlying profits dropped by 8 per cent, hit by a sharp fall in its mortgage lending and further pressure on margins from price competition.

Hornby said the restructuring was "completely unrelated".

"Our retail insurance and investment businesses have becoming closer together in recent years, with products sold through the same distribution networks," he added.

Hornby decided there was merit in splitting the retail division in two, giving Dawson and Watkins responsibility for half each.

The decision of Hodkinson to retire was not unexpected for Hornby, who said: "Phil told me well over a year ago that he wanted to retire when he was 50."

Hodkinson said he planned to spend more time in charitable work, of which he has considerable experience, as a board member of Business in the Community and the HBOS Foundation, an independent registered charity funded by donations from the bank.

The return of Ellis was completely unexpected.

"We have been able to plan for this for quite some time," Hornby said. "Mike decided he missed the cut and thrust of a large organisation and we are delighted we have got him back."

Gore-Randall was appointed to the role of COO because, according to Hornby, he had an "excellent track record" both in the UK and in global projects.

"I thought he was the kind of heavyweight figure that could be in charge of a very big budget and our cost-reduction programme," Hornby added.

One industry analyst said: "[Ellis] coming out of retirement is a bit odd. He's a safe pair of hands, but he's not going to impress the market."