Uncertainty clouds unveiling of Lloyds chief’s ‘simplified’ working

Published on Tuesday 31 January 2012 00:00

LLOYDS is expected to unveil the simplified working arrangements for its chief executive as early as today or tomorrow despite continued uncertainty over when finance director-designate George Culmer will be able to take up his position with the bank.

Chief executive Antonio Horta‑Osorio was off sick for November and most of December after suffering chronic insomnia, and his new working template will involve fewer top executives reporting directly to him to ease his daily operational workload.

A core part of the management revamp is said to be the proposed hiring of Culmer from insurer RSA, which was first announced in November, as one of Horta‑Osorio’s key new lieutenants.

But it is understood that tough negotiations are still going on between the bank and RSA to break him out of a rolling one-year contract. It was unclear last night whether Lloyds will be able to reveal Culmer’s start date alongside this week’s restructuring announcement.

Sources close to the talks between RSA and the bank said the sticking point was less financial than the insurer’s wish to have a replacement finance director set up to step into the breach when Culmer eventually departs for part‑taxpayer owned Lloyds.

“RSA wants a replacement for him signed, sealed and delivered before they let him go,” one source said.

This week’s statement from Lloyds, which received a £17 billion taxpayer bail-out after its “rescue” takeover of HBOS in 2008, is expected to confirm the chief executive will cut the number of executive directors reporting directly to him from 14 to about ten.

The City believes Lloyds may also confirm that Andrew Geczy, who leads the wholesale banking and markets division, will become the new head of the wholesale division, replacing Truett Tate.

The bank was embarrassingly foiled in its announcement that Tate would be succeeded by Nathan Bostock, head of risk at Royal Bank of Scotland, after the RBS man changed his mind about making the switch late in 2011.

That came amid the shock temporary sidelining of Horta‑Osorio through illness and was seen as highlighting the boardroom volatility at Lloyds.

The idea of fewer executives reporting to the Lloyds boss is considered crucial to fulfilling his promise of focusing more on strategy than being swamped in day‑to‑day operational matters.

That, in turn, is meant to reassure the bank’s investors that Horta‑Osorio, whose stewardship before the illness was generally approved by the City, will not succumb to exhaustion again. The 14 executives reporting directly to Horta‑Osorio include the heads of key business areas, including Alison Brittain for the Lloyds TSB and Bank of Scotland retail brands and David Nicholson for the Halifax retail business.

Lloyds’s shares closed down 4 per cent at 31.08p, meaning the taxpayer is sitting on a £8.8bn loss on its 41 per cent stake.

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