Leadership woes weigh on Lloyds

Lloyds Banking Group is under mounting pressure to provide an update on the leadership vacuum created by the absence of its chief executive.

Major institutional shareholders have said that they are concerned at the lack of information provided by the taxpayer-backed bank since Antonio Horta-Osorio left on sick leave two weeks ago.

Lloyds has said it hopes its Portuguese boss will return to his post by the end of the year.

But investors believe it will be difficult for Horta-Osorio, who is understood to be suffering from fatigue due to overwork, to resume his role even if he returns to full health.

The group’s finance director, Tim Tookey, is currently in charge but he is due to leave in February to join Friends Provident life assurer Friends Life.

One investor questioned why the bank had not speeded up its internal contingency plan as to what it would do if Horta-Osorio is unable to return.

It is understood that one of the board, probably senior independent director Glen Moreno or fellow non-executive David Roberts, would take on the role on a temporary basis until a full-time external replacement is found.

Credit rating agency Moody’s last week put Lloyds’ debt rating under review for a possible downgrade as a result of “significant upheaval” in its senior management, which it fears may disrupt the company’s restructuring plans.

UK Financial Investments, which manages the government’s 40.2 per cent stake in Lloyds, is thought to be supportive of the bank’s approach so far.

One source, however, said that the board is hoping for the best, but planning for the worst.