Government pressures Lloyds over absence of Antonio Horta-Osorio

LLOYDS chairman Sir Win Bischoff and non-executive director Glen Moreno have been sounded out about taking over from Antonio Horta-Osorio as the UK government puts pressure on the taxpayer-funded bank to prepare for the possibility that its exhausted chief executive will not return.

Insiders say Bischoff, 70, and Moreno, 68, are viewed as among the most suitable candidates to provide stability and continuity at the bank, which was rocked last week by the news that Horta-Osorio has been forced to take time off to battle stress and fatigue.

Concerns over the crisis at the top of Lloyds are likely to be exacerbated tomorrow when it is tipped to reveal a further loss of about £500 million when it updates investors on third-quarter trading.

Although the bank continues to state publicly that Horta-Osorio is due to return before the end of the year, it is believed that a contingency plan is being drawn up – with Bischoff and Moreno at the centre.

Analysts believe it is a serious likelihood the chief executive will not return, raising alarm bells over a power vacuum at the top of the bank.

Prior to last week’s shock news, it was understood that Bischoff, the former Citigroup chairman who also ran Schroders for 11 years, was preparing to make his own exit towards the end of next year. But insiders say he is now likely to postpone any departure to play a central role in stabilising the bank.

Some say the most likely scenario would be for Bischoff to remain as chairman while Moreno – who joined the Lloyds board in March 2010 and is currently also chairman of media group Pearson – takes the reins as chief executive. Bischoff is believed to have some concerns around becoming executive chairman.

A spokesman for Lloyds last night declined to comment, saying: “It is all pure speculation.”

However, it has been reported that the bank’s board could make some key decisions over the succession within the next two-to-three weeks after they have been updated on the state of Horta-Osorio’s health.

The company, 40.2 per cent owned by the UK taxpayer, is said to be under pressure from the government to draw up a contingency plan. Eyebrows were raised last week when the bank chose to name Tim Tookey, the outgoing finance director, as interim chief executive given that he is departing for a job at Friends Life in February.

Other names that have been linked to Horta-Osorio’s role include Benny Higgins of Tesco Bank; Gary Hoffman, head of banking acquisitions vehicle NBNK; Bill Winters of JP Morgan; Colm Kelleher of Morgan Stanley and Nathan Bostock, whom Lloyds poached from rival Royal Bank of Scotland to take over as head of wholesale in the spring.

Tookey is tomorrow likely to receive a grilling from analysts and investors who are eager for more answers about the turmoil at the top of the organisation and what effect that will have on the timetable to dispose of 632 branches up for sale under Project Verde,

He is expected to confirm that bad debts are still running at an “elevated” level of around £2.7 billion, compared with £2.6bn during the second quarter.

Meanwhile, rival RBS, which updated on third-quarter trading on Friday, has stoked controversy amid suggestions that it is preparing to pay its investment bankers £500m in bonuses, despite revenues at that division plummeting 29 per cent between July and September.

An RBS spokeswoman said: “No decisions have yet been made and bonuses are not decided until the new year.”