Lloyds boss off sick with stress… after only seven months

Taxpayer-funded Lloyds Banking Group is gripped by speculation that chief executive Antonio Horta-Osorio will not return to his £1 million a year job, following his “temporary” departure from the post just months after being installed.

Banking insiders warned that Lloyds “needs to find a replacement” – even though the bank insisted that Mr Horta-Osorio was expected to return to work by Christmas – amid reports that he was suffering from extreme fatigue due to over-work.

His leave on full pay sparked calls from senior MSPs for “transparency” over whether the absence would affect the Portuguese banker’s guaranteed bonus of £2.3 million this year, which he was promised alongside a controversial £8.3m golden hello when he started work in March.

The former Santander UK boss is presiding over a programme of 15,000 jobs cuts at Lloyds, which has been 41 per cent owned by the UK government since it was bailed out at the height of the 2008 banking crisis.

As shares plummeted by 4.4 per cent at the news of Mr Horta-Osorio’s leave, Scottish Labour’s finance spokesman, Richard Baker, issued a stark warning about the mounting cost to the taxpayer.

Mr Baker said: “The fact that it’s a partly nationalised bank is a very important aspect here and it’s perfectly reasonable to ask for transparency about what his terms will be while he’s taking medical leave.”

The Lloyds board held an emergency board meeting yesterday to discuss Mr Horta-Osorio’s absence.

The group confirmed chief financial officer Tim Tookey will take over as chief executive on a temporary basis – even though he is due to leave in February.

Mr Horta-Osorio’s temporary departure was described as a “big surprise” by a leading finance analyst.

Shore Capital finance analyst Gary Greenwood said: “It’s a big surprise which could potentially leave Lloyds without a chief executive or finance director at a time when the economic backdrop is terrible.”

His departure comes just months after Andy Hornby, the man running HBOS when it had to be rescued by Lloyds bank in 2008, quit his £850,000-a-year job as chief executive of healthcare group Alliance Boots, saying needed “a few months’ break” due to stress.

Mr Horta-Osorio has been a controversial figure since he joined Lloyds from Santander UK, with an anonymous Lloyds employee recently describing him as “intense and scary”.

Since arriving at Lloyds, Mr Horta-Osorio has pushed ahead with plans to sell off 630 retail branches of the bank, and presided over the departure of group executives associated with the previous management led by former chief executive Eric Daniels.

In September, Lloyds announced that Tookey would leave after February 2012, while former Lloyds retail banking head Helen Weir and insurance head Archie Kane have also stepped down.

A banking industry source suggested that Mr Horta-Osorio had struggled to adjust to moving to Lloyds from a “smaller bank” like Santander and the switch had been “problematic”.

The source said: “The trouble is where that [way of working] might have been possible at a smaller bank like Santander it would be problematic at a far bigger organisation like Lloyds.

“There would not be enough hours in the day to replicate the Santander approach at Lloyds.”

Leading fund manager Paul Mumford, of Cavendish Asset Management, said that Mr Horta-Osorio’s sick leave was “disappointing” for shareholders.

He said: “It’s a bit of a worry when a key person gets a problem like this. But the positive is that Antonio has been in place long enough, effectively since the beginning of this year, to put the strategy in place and his subordinates should be able to continue implementing it.”

One banking source said that Mr Horta-Osorio’s workload had brought on illness. “He’s been suffering from fatigue due to over-work,” the source claimed.

Lloyds would not discuss details of Mr Horta-Osorio‘s pay while he is away on leave, but his multi-million-pound remuneration package is initially understood to be unaffected by his absence.

But the bank faced calls from senior SNP MSP John Wilson, the deputy head of Holyrood’s economy committee, to be more open about whether his taxpayer-subsidised salary and bonuses would be paid in full in the long er term.

Mr Wilson said: “Will he retain his bonuses and pay in full? There’s a question of whether or not the chief executive’s payments will be altered to take account of this sick leave.”

A Lloyds spokesman yesterday insisted that Mr Horta-Osorio’s absence from work was not permanent.

A statement said: “The board of Lloyds Banking Group announces that, following medical advice, Antonio Horta-Osorio is taking a temporary leave of absence from his duties as group chief executive of the bank due to illness.

“Antonio is expected to return to his position before the end of the year.”