The highs and lows of Antonio Horta-Osorio’s decade at Lloyds
The return to dividend payouts announced today is a strong legacy for the outgoing Lloyds boss, who oversaw the successful turnaround of a bank left reeling from the financial crisis.
Antonio Horta-Osorio will step down at the end of April, with finance chief William Chalmers set to take over temporarily before HSBC banker Charlie Nunn joins in August.
The high street lender beat expectations with pretax profit of £792m in the fourth quarterm bringing total profits before tax to £1.2bn. It has allowed the banking boss to finish his 10-year tenure on a high.
City PM looks back at some of the highs and lows of Horta-Osorio’s time at Lloyds.
Return of the dividend
Following in the footsteps of its peers Barclays and Natwest, Lloyds today announced a final dividend of 0.57 pence per share, the maximum allowed under current Bank of England rules.
Analysts had predicted a 0.53 pence per share payout after the central bank gave the green light to restart payments back in December.
“Expectations were not pitched too high but it is still an achievement that the numbers cleared this low bar and ultimately his tenure is likely to be remembered by investors for the return of the dividend,” AJ Bell’s investment director Russ Mould said.
Steering Lloyds back into private hands
When he arrived at Lloyds Horta-Osorio laid out a strategy to bolster the bank’s balance sheet, selling off toxic loans and moving away from short-term funding.
He then steered Lloyds back into private ownership after a £21bn taxpayer bailout at the peak of the financial crisis. The government sold its last stake in the bank in 2017.
At the time the Portugese banker said he had inherited a “business that was in a very fragile financial condition” and investors lauded his efforts.
Over the last 10 years Lloyds has returned to profitability. By 2017 the bank posted a statutory profit of £5.3bn as well as paying out its largest ever dividend to its shareholders of £2.3bn. But it has not been an easy ride.
Pandemic ravages Lloyds
The pandemic has been a real test for the bank, and the wider economy, but Lloyds reported a return to profits in the third quarter.
It had posted a £602m loss in the first half after increasing bad loan provisions to £4.1bn for the first nine months of the year.
Horta-Osorio’s successor will face a myriad of challenges when he takes over in the summer. “Interest rates are through the floor, squeezing margins; its ability to pay out dividends is constrained by the regulator; and bad debts have spiralled as a result of the economic impact of coronavirus,” Mould said.
That said Lloyds has set out targets to expand the bank’s insurance and wealth business and is targeting further cost-cutting measures.
Scandals: From HBOS to an alleged affair
Although the HBOS scandal happened before Lloyds’ takeover in 2008, the bank’s boss has been criticised for their handling of the saga.
Between 2003 and 2007, financiers at the Reading branch defrauded several businesses including one run by Deal or No Deal star Noel Edmonds.
Horta-Osorio apologised after flaws in the compensation scheme were unearthed in December 2019.
The banker saw his pay cut last year following criticism of his £6.5m remuneration package in 2019, making him one of Britain’s best paid bankers that year.
He was forced to defend his pay to MPs on the Work and Pensions Committee, who said frontline employees had complained about wage disparity.
Finally, Horta-Osorio received flak for his alleged extramarital affair with Wendy Piatt, Blair’s former adviser, while on a business trip in 2016. He eventually apologised to the bank’s 75,000 staff for the bad publicity.