Martin Flanagan: Lloyds showing signs of flagging with news of back–up plans

IT HAS got a bit messier at Lloyds Banking Group’s buffeted helm. Already disquieted by chief executive Antonio Horta‑Osorio’s enforced leave of absence through stress, investors got two more unwelcome jolts yesterday. The bank announced that it has appointed non‑executive director David Roberts as a back‑up interim chief executive should Horta‑Osorio’s planned return by Christmas be delayed.

While not exactly coming out of a clear sky, it is still an implicit change of tack by the bank as chairman Sir Win Bischoff said at the beginning of November that he was “very confident” that the sick boss would be “back in harness” before the end of the year.

This is not to disparage Roberts, who has a decent if low‑key banking pedigree, particularly at Barclays, before joining Lloyds in March 2010. But, while it is sensible to have contingency plans in an uncertain situation, it still raises as many questions about the bank’s future as it answers.

Compounding the sense of confusion and flux in the Lloyds’ boardroom, the bank also announced that one of Horta‑Osorio’s key planned appointments, Nathan Bostock, has changed his mind about joining the group.

Bostock was due to become chief executive of wholesale banking at Lloyds, but appears to have got cold feet and is to stay instead at Royal Bank of Scotland as chief risk officer.

Apart from the strategic implications, the change of heart is likely to pain Horta‑Osorio personally as Bostock was headhunted from RBS last summer. The duo previously worked together at Santander between September 2006 and May 2009, when the Portuguese was chief executive and Bostock a highly regarded executive director of products and marketing, cards and insurance, as well as former finance director.

Apart from the personal rejection, it means Truett Tate remains as executive director of Lloyds’ wholesale arm, which has been his responsibility for the past seven years.

But the abortive attempt to poach Bostock clearly showed wholesale banking – mainly lending to large corporate clients – was a division that Horta‑Osorio wanted to shake up with new blood at the top. And it is another derailment instead. Tate cannot feel he has the full confidence of his boss even if the latter does return as planned.

It has damaged perceptions of Lloyds again. Bostock’s decision not to jump ship looks like a senior, seasoned banking industry executive deciding Horta‑Osorio’s health problems and uncertain return make the proposed job less appetising than it was last July.

In this, it is playing directly on the fears of investors who initially welcomed the highly respected Horta‑Osorio as a new broom with a distinct new strategy but now see an apparent further unravelling of the part‑taxpayer owned group.

CBI chief may have some trouble selling his ‘pity the bankers’ call

THE president of the CBI has called for an end to the “demonisation” of banking and the wider business world. I wish him luck with that one as corporate remuneration rockets and the austerity programme puts many on the dole.

Prime Minister David Cameron told the annual CBI conference that an easing of said austerity programme would be a major mistake. In short, the Tory‑led government is not for turning on burning the country’s borrowings.

Both CBI president Sir Roger Carr and the PM were in reality pushing at an open door with such an audience. Nobody likes being demonised and business undoubtedly believes it unfairly gets tarred with the same brush for the “rewards for failure” stories that have become virtually endemic, even if Carr is the latest in a long line of business bigwigs to say he abhors unjustified boardroom largesse.

And the CBI threw its weight behind the deficit reduction plan with a survey published on the eve of its conference. Business thinks virtually nothing is as important to Britain’s economic recovery than preserving the country’s credit ratings.

And business people certainly have some evidence to hand, with the dizzying interest rates being charged on the borrowings of debt‑hobbled countries such as Greece, Italy and, increasingly, France and Spain.

However, the Labour party will slam Cameron’s blazoned firmness on the debt as dangerous intransigence. The stakes in the court of public opinion are likely to get much higher from here.

What some may see as showing nerve with the deficit reduction in challenging times, others will dismiss as doctrinaire obduracy as the economic ship flirts with the rocks.

It is probably one of the most difficult political calls in decades. Cameron will hope that he at least does not have the damaging complication in the public debate of banking and other sectors looking like they breathe different remuneration air than the rest of us.