Lloyds boss Daniels to ride off into the sunset next year

Controversial Lloyds CEO Eric Daniels is finally on his way. A year or two too late, some would argue...

by James Taylor
Last Updated: 19 Aug 2013
Just when it looked as though he may have weathered the storm, Lloyds CEO Eric Daniels has announced his resignation: the much-criticised American will retire from the part-state-owned bank in a year's time. Shareholders may not shed too many tears - Daniels' decision to buy HBOS in 2008 forced the group to accept a £20bn bailout from the Government, and it still hasn't paid any dividends since. That may have changed by the time Daniels leaves, given that the bank is (finally) back in the black. But it'll probably take a little longer for before we know whether his great HBOS gamble has paid off...

Daniels' departure - which, incidentally, means that all our big retail banks have now changed their CEO since the credit crunch - has been the subject of rumour and speculation for months. The so-called 'Quiet American' wasn't guilty of Goodwin-esque over-reaching in the run-up to the crisis; in fact, he was criticised for being too conservative. However, it was the subsequent acquisition of HBOS that will inevitably define his tenure. Lloyds continues to insist it was a once-in-a-lifetime opportunity to complete a transformational deal. And maybe it'll turn out to be right. But the extent of the ordure buried in HBOS's coffers has certainly produced a lot of short-term pain: the Government ended up taking a 41% stake, and Lloyds only returned to profit in the first half of this year.

When Daniels' resignation was announced today, Lloyds shares actually went up. So clearly not all the bank's shareholders agree with chairman Sir Win Bischoff, who said politely today: 'The entire board and I are grateful to Eric for his leadership… particularly since the announcement of the acquisition of HBOS in September 2008’.

But why now, just as things seemed to be calming down? Well, maybe Daniels just wants to put his feet up when he hits 60 (and who can blame him for that?). Or maybe it's to do with this new Government banking commission, which in its investigation of competition in the UK banking sector is likely to have far-reaching consequences for Lloyds (especially since Sir John Vickers, the man in charge, opposed the hastiness of the Lloyds/ HBOS merger while at the OFT). Maybe those negotiations will be easier with a fresh face at the helm.

Which leaves one pressing question: who's going to step into the Daniels brogues? External candidates being linked with the job include Lord Davies, the ex-Standard Chartered chairman (and trade minister), and HSBC FD Douglas Flint; while internally, analysts reckon the best bet is Helen Weir, the ex-Unilever and McKinseyite who now heads up Lloyds' retail banking. And although the job will no doubt attract some heavyweight interest, promoting from within - and promoting a UK-based female retail banker at that - would be a great way for Lloyds to avoid the kind of criticism that Barclays has received over 'Bonus' Bob Diamond (and Barclays doesn't have the Government as its largest shareholder...)

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