Blank will step down from Lloyds
Sir Victor Blank will step down as chairman of Lloyds Banking Group before June 2010, in what could be the first move to restoring the bank’s credibility among shareholders after its much-criticised takeover of HBOS.
Sir Victor decided to retire early in the face of a potential shareholder revolt against Lloyds management at next month’s annual meeting and a lack of public support from UK Financial Invesments, the body that runs the taxpayer’s 43 per cent stake in the bank.
Although Sir Victor is close to Gordon Brown, the prime minister wants to maximise investor confidence in Lloyds’ management, as UKFI considers selling some or all of the government’s stake within the next year.
Eric Daniels, the Lloyds chief executive who admitted there was not enough time to carry out normal due diligence before the HBOS merger, wins some breathing space for now but could be in jeopardy when a new chairman is appointed.
One person close to the situation insisted Mr Daniels would stay for the time being, but conceded: “That could change when a new chairman comes in.”
Early speculation on potential successors to Sir Victor include two other Labour favourites: Sir Win Bischoff, the former Citigroup chairman who jointly chaired a Treasury review on the City’s future; and Mervyn Davies, the former Standard Chartered chairman, who now sits in the Lords as a trade minister.
Pressure for Sir Victor to stand down had been growing after it emerged that most of Lloyds’ bad debt charges stemmed from poor lending decisions made by HBOS.
This month, Lloyds said it expected bad debt charges on corporate loans to rise 50 per cent in 2009. Sir Victor on Sunday stood by the deal, saying it remained – in the medium term – “a unique value-enhancing opportunity”.
After Sir Victor’s announcement, Lloyds said the board was “unanimous in wanting Sir Victor Blank to seek re-election as chairman for another three years”. The bank appointed Lord Leitch as deputy chairman, with immediate effect.
UKFI also confirmed its support for Sir Victor’s re-election, praising his “unstinting” efforts to make the merger a success.
Mr Brown had hoped Sir Victor and Mr Daniels would lead Lloyds back to health. In March government officials hailed the ability of the “conservative team” running the bank and last week officials said Sir Victor still retained ministers’ confidence.
Mr Brown’s spokesman said: “The prime minister is grateful for Victor Blank’s contribution and for agreeing to stay on to oversee the early part of integration of Lloyds and HBOS and his succession.”
The Lloyds/HBOS deal saved the taxpayer from having to intervene immediately to save HBOS.
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