Lloyds Chairman Blank to step down

By Steve Slater

LONDON (Reuters) - Victor Blank is to step down as chairman of Lloyds Banking Group in the next year, following intense criticism of his part-nationalised bank's purchase of troubled rival HBOS.

This year's takeover of HBOS has saddled Lloyds with billions of pounds of losses from HBOS's more risky loan book, forcing the government to provide rescue funds and prompting investors to call for Blank to quit.

Lloyds said on Sunday the decision to retire was Blank's, and its board was unanimous in wanting him to seek re-election for another three years.

Blank's decision could avoid a potentially contentious vote at Lloyds' annual shareholder meeting next month, as he is due to stand for re-election and some investors were likely to reject another full term.

UK Financial Investments, which manages the government's stakes in banks, including a 43 percent holding in Lloyds, said it would support Blank's re-election next month, while acknowledging his decision to step down.

Blank, 66, said he would retire by Lloyds' 2010 annual shareholder meeting as it was "the right time" to appoint a new chairman. This year's AGM will be held on June 5, later than usual.

HBOS, Britain's largest home lender through its Halifax brand, was at risk of collapse last September when Lloyds decided to buy it.

The deal only went ahead after Blank was reassured by Prime Minister Gordon Brown at a cocktail party that the government would waive competition rules to allow the creation of a dominant domestic retail bank.