Lloyds investors seek CEO options following allegations

Top investors in Lloyds Banking Group are concerned chief executive Antonio Horta-Osorio might leave the bank sooner than anticipated following press scrutiny of his private life and want its board to start looking for his successor.

After a stellar 2015, which saw Lloyds swing back to profit, restore dividends and millions of British government shares sold to private owners, 2016 has been less auspicious for the Portuguese banker, who took the top job five years ago.

Britain's vote to leave the European Union in June and the Bank of England base rate cut that followed has put Lloyds' ambitious profit and dividend targets under strain, and cast fresh doubts about when the government might be able to recoup the last of the taxpayer cash used in its 2008 bailout.

Then on Wednesday, Lloyds was forced to defend Horta-Osorio's expenses after the Sun newspaper, published by Rupert Murdoch's News Corp, carried a front-page story alleging the married chief executive ran up a £3,826 (€4,448) hotel bill while spending time with another woman.

It was unclear earlier this week whether the tab was picked up by him or by the bailed-out bank.

Intense scrutiny

The intense scrutiny of his private life has led some investors to fear Horta-Osorio could quit before the task of restructuring Britain’s biggest mortgage lender is complete.

“It is definitely something the board should be thinking hard about,” one of the bank’s top 20 shareholders said, who declined to be named because of the sensitivity of the matter.

“It’s a concern allied to the fact that the job for next couple of years is going to be harder than he thought now.”

Lloyds said its chairman Norman Blackwell had reviewed the allegations and was satisfied Horta-Osorio had paid his own personal expenses while attending a Singapore conference.

“Antonio has the full confidence and backing of the board in his role as chief executive, and he remains committed to the bank and delivering on its strategic ambitions,” a spokeswoman said in a statement on Thursday.

Horta-Osorio was unavailable for comment, the spokeswoman said.

The tabloid story follows disappointing corporate headlines for Lloyds after it announced a further 3,000 cuts from its 75,000-strong workforce and plans to close 200 branches by the end of next year.

It is already part-way through culling 9,000 jobs and has closed nearly 100 branches so far in 2016.

Its shares have tumbled by almost 25 per cent this year and it now faces millions of pounds of unexpected compensation payouts linked to its role in Britain’s payment protection insurance scandal after a claims deadline extension.

- Reuters