António Horta-Osório bows out at Lloyds Bank (LLOY.L) this week after a decade in charge of one of Britain's biggest finance firms.
Horta-Osório will be the UK's longest serving post-crisis banking chief when he officially leaves the bank on Friday. His track record in charge also makes him undoubtedly the best.
While Lloyds' share price is nowhere near its pre-2008 highs — and unlikely to ever get back there — Horta-Osório has successfully rescued the lender from the brink, put it on a sustainable footing, established a digital first plan for the future, and returned taxpayer cash to the government.
"It’s with mixed feelings that I’m leaving this group after 10 years," Horta-Osório told journalists on an earnings call on Wednesday. "It was a big honour, together with the team and everybody at Lloyds, to repair Lloyds and enable Lloyds to feel its purpose of helping Britain prosper,"
Portuguese Horta-Osório joined Lloyds as chief executive in early 2011 while the bank was still reeling from the impact of the financial crisis. The job amounted to a hospital pass. A government-engineered shotgun wedding to failing HBOS at the height of the crisis had left Lloyds with hundreds of billions in toxic assets. The bank was months away from running out of cash.
The pressure was so great that Horta-Osório had to be signed off sick with exhaustion shortly after taking the job.
"The difficulties in the beginning and the very weak financial condition of the bank, which as you know it is now clear, that was a really low light," he said this week. "It was difficult to speak about, banking is all about trust and therefore you can’t really speak freely about important financial problems that the bank had at the time. Those were very bad days in fact."
After a period of recovery at the Priory clinic, Horta-Osório returned to Lloyds and set about the hard work of fixing the battered bank. He oversaw the sale of HBOS' toxic loan book, reduced the bank's reliance on short-term funding, bolstered the balance sheet, and scaled back risk-taking. Horta-Osório also slashed jobs as he sought to cut costs.
"When you look at the bank today, and you look at the bank then, you probably have the scale of the difference when you look at the balance sheet, I think that’s very striking." he said.
"I think that UK banks as a whole have come a long way since the financial crisis. When you look at the UK banking sector today you see a much stronger capital position, a much stronger liquidity position, much better loan-to-deposit ratios and much better asset quality."
Horta-Osório's slow-and-steady repair job allowed the government to gradually sell down its stake in the lender. The Treasury had bailed out Lloyds in the depths of the financial crisis, injecting just over £20bn in return for a 43% stake. By 2017, the investment had fallen to zero.
"The highlight of these 10 years has been the day when we were told by the Treasury at 4.40pm that they had sold their final shares," Horta-Osório said. "We quickly put everybody online and I congratulated the teams on having returned taxpayers money back and some more."
Horta-Osório has said the government made around £500m on its investment in Lloyds. By contrast, the state still owns 60% of rival NatWest Group (NWG.L).
"We were the only bank in the UK to have done that and I think that was a particularly high moment," Horta-Osório said.
More recently, the 57-year-old has helped pilot Lloyds through the COVID-19 pandemic. His success was highlighted in the bank's first quarter results this week — shares leapt in London after Lloyds reported a forecast-beating £1.9bn profit.
"Everything is done by a team of people, nobody does anything alone," Horta-Osório said. "To have been able to go on the journey with all the people at Lloyds and achieving really the purpose of helping the real economy of the UK, to the extent we could — this journey has been a continuous highlight of my tenure here."
His tenure has not been without controversy. As Britain's best paid banking CEO, Horta-Osório has faced questions over whether he was worth it and criticism from MPs. Horta-Osório also found himself on the front page of The Sun newspaper for an alleged affair in Singapore, a story that carried the infamous headline: 'Lloyds Bonk'. On balance, however, his time at Lloyds will be chalked up as a success.
Horta-Osório leaves to take up the chairman's position at Credit Suisse (CSGN.SW) — a role that now has striking similarities to the Lloyds CEO position when he took it up. Credit Suisse (CS) also looks like a fixer-upper: the bank has been reeling from scandal to scandal, most recently finding itself caught in the fallout from the implosions of both Greensill and Archegos Capital. The bank was forced to turn to investors for a $2bn bailout to repair its balance sheet.
Horta-Osório declined to talk about his new role on the earning call this week, instead focusing on saying his goodbyes at Lloyds.
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