Lloyds CEO Daniels to retire in next year

LONDON Mon Sep 20, 2010 6:52pm BST

Eric Daniels speaks to journalists after a news conference, in the City of London on September 18, 2008. REUTERS/Luke MacGregor

Eric Daniels speaks to journalists after a news conference, in the City of London on September 18, 2008.

Credit: Reuters/Luke MacGregor

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LONDON (Reuters) - Lloyds Banking Group Plc said Chief Executive Eric Daniels will retire in the next year, leaving the part-nationalised British bank to find a successor capable of fighting off a potential break-up.

Daniels, criticised by Lloyds shareholders for the takeover of ailing rival HBOS at the height of the financial crisis two years ago, will stay on as CEO until a replacement is found, the bank said on Monday.

The HBOS deal saddled conservatively run Lloyds with huge losses on commercial and retail loans and forced the bank to take 17 billion pounds of emergency government help, handing a 41 percent stake to the taxpayer.

There has been speculation for months that Daniels, 59, could go, but the American said there had been no investor pressure for him to quit and defended the HBOS acquisition.

"This is very much my decision," he told reporters on a conference call. "We will demonstrate that (buying HBOS) is something that has completely repositioned the bank. Clearly we have strong momentum going forward so I think the shareholders and the taxpayer will do very, very well with their investment in Lloyds."

Shares in Lloyds, Europe's fourth-biggest bank with a market value the size of Deutsche Bank and Societe Generale combined, closed 2.8 percent higher at 77.42 pence, compared with the average 73.6 pence price paid by the state.

The government aims to sell its stakes in Lloyds and Royal Bank of Scotland at a profit, but no disposals are expected until after an independent banking commission tasked with investigating competition in the industry has reported its conclusions in September 2011.

The commission could recommend that Lloyds be broken up or face other restrictions to limit its dominant position in retail banking and mortgage lending.

RECRUITMENT RACE

Lloyds Chairman Win Bischoff will lead the search for Daniels' successor and will consider external and internal candidates. No shortlist of potential successors was yet in place and headhunters have yet to be appointed, Bischoff said.

Bischoff denied Daniels would be a "lame duck" chief on the way out and said if a replacement was found the change could come within the year.

Oriel Securities analyst Mike Trippitt said Lloyds's head of retail banking Helen Weir was the only likely candidate from within. "Lloyds may look to the Australian and Canadian banking systems for candidates. Both came through the crisis in good shape," he wrote in a note.

Former Barclays Plc executives Naguib Kheraj and Frits Seegers are also potential replacements, Execution Noble analyst Joe Dickerson said.

Montana-born Daniels is the longest serving CEO at a major British bank, having taken the helm in 2003 following two years in charge of retail banking.

The quietly spoken, former Citibank banker was lauded in his first few years for turning around the bank with a relentless focus on cheap funding, strong capital and avoiding risky lending, but he will be remembered for the takeover of HBOS, widely slammed by investors and politicians.

That government-brokered deal was hurried through despite competition concerns to help save HBOS, owner of Halifax and Bank of Scotland and Britain's biggest mortgage provider.

At the height of criticism, Daniels told a committee of MPs he would have liked to have had three to five times more due diligence on the rushed deal.

He prompted further anger when he told the same panel he was on a "relatively modest" annual salary of more than 1 million pounds.

Daniels had accrued a pension pot of 3.8 million pounds at the end of 2009 and owned 2.6 million shares, worth about 2 million pounds. He stands to get shares under long-term performance plans, plus more if HBOS is successfully integrated, but will not receive severance pay as he is retiring.

In August, Lloyds reported a profit of 1.6 billion pounds for the first half of 2010, reversing two years of losses.

News of Daniels's departure comes two weeks after HSBC Chairman Stephen Green and Barclays Chief Executive John Varley announced plans to step down.

(Editing by David Holmes)

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Comments (1)
Mordwinoff wrote:
He should have been sacked along with Blank when they sucked up to Brown and merged with HBOS without due diligence costing the shareholders a fortune.

Sep 20, 2010 3:29pm BST  --  Report as abuse
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