Bischoff, who had been the favourite to land the job, said he saw his role as executing the strategy already underway and ridding Lloyds of state help.
“You get the credibility and trust back from shareholders and customers by running a sound, good bank that doesn’t have to have recourse to outside help,” he told Reuters in an interview.
But he declined to say when he expected Lloyds, 43 percent owned by the government, to stand on its own.
He will start as chairman on September 15.
Current chairman Victor Blank said in May he would step down within a year, following criticism of Lloyds’ takeover of troubled lender HBOS this year.
Lloyds Chief Executive Eric Daniels, who has come under fire for the HBOS deal, was the right man to lead the bank’s strategy, Bischoff said.
“It’s important you make sure the execution goes forward and from all I know Eric is the right person to supervise that execution,” Bischoff said.
Asked if he would review Daniels’ position, he said: “I don’t think that’s my first priority.”
The takeover of HBOS has saddled Lloyds with billions of pounds of losses from that lender’s more risky loan book, forcing the government to provide billions in rescue funds.
UK Financial Investments (UKFI), the body which oversees the government’s bank holdings, earlier this month said media reports tipping Bischoff to take the helm at Lloyds were “pure speculation.”
Bischoff, 68, was interim chief executive of Citigroup for a month at the end of 2007 and was chairman of the bank from December 2007 until January 2009.
German-born and South Africa-educated, he landed at Citi via its acquisition in 2000 of the investment banking business of Schroders, where he had been chairman since 1995.
He became chairman of Citi’s business in Europe.
He will be paid 700,000 pounds annually by Lloyds.
Lloyds needs to integrate HBOS and limit losses to its loan portfolio, and may also have to sell core assets to comply with European antitrust rules. Bischoff may also have to oversee thousands more job cuts, and along with other UK banks, faces pressure to maintain lending to aid economic recovery.
“It’s understandable in the circumstances that government puts its view forward and I suspect banks will listen and try to do what is appropriate,” he said.
Chancellor Alistair Darling told banks to lend more to small businesses on Monday.
Lloyds shares closed up 6.9 percent at 83.33 pence, helped by a stronger European banking .SX7P sector and an upgrade by broker Nomura ahead of half-year results next week. Bischoff’s appointment was announced after the market had closed.
Editing by Marie Maitre