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Lloyds poaches Santander's UK head as new CEO

Source: Reuters - Wed 3rd Nov 2010

British bank Lloyds poached Antonio Horta-Osorio, head of Santander's fast-growing British division, to be its next chief executive in a coup that deals a blow to its Spanish rival.

Lloyds, Europe's fourth biggest bank by value despite a government bailout, said Horta-Osorio will join the company early next year and replace Eric Daniels as CEO of the part-nationalised lender on March 1.

Horta-Osorio had been seen as a likely successor to Santander chief executive Alfredo Saenz. Another candidate, Ana Patricia Botin - daughter of chairman Emilio Botin - will now replace Horta-Osorio as head of the British unit, a person familiar with the matter said.

"It is an exciting appointment. He has a track record, he comes in to run the biggest UK retail bank and will give real momentum to it," said Chris Wheeler, banking analyst at Mediobanca in London.

"It is a great hire for Lloyds, the jury is out for what it means for Santander ... this won't phase them but it is an irritation. They have a deep bench of management, that has always been a strength."

Santander UK said it would announce its new chief executive in due course.

Santander shares were down 1 percent by 1200 GMT, while Lloyds was up 3.4 percent to reverse its loss on Tuesday when concerns over losses from problem loans and tougher competition overshadowed an upbeat trading statement.


Analysts said Horta-Osorio's departure could affect a planned flotation of Santander UK - which comprises the historic Abbey and Alliance & Leicester brands - expected to raise at least 3 billion pounds.

Jane Coffey, who heads British equities at Royal London Asset Management, said Horta-Osorio was a good choice to run Lloyds. "It is a good appointment. An external candidate would be less tarred with the HBOS merger, and he has done a good job so far with Abbey," she said.

Lloyds was saddled with billions of pounds of losses after buying troubled rival HBOS at the height of the credit crisis in a rescue deal brokered by the Labour government of the time. The state subsequently took a 41 percent stake after spiralling bad loans forced the bank to accept a taxpayer-funded bailout.

The British government welcomed the appointment of Horta-Osorio and hoped he would drive more lending to small businesses at Lloyds - a key factor to help the economy recover from the credit crunch.

Horta-Osorio, although seen as a future CEO of Santander, now faces an immediate turnaround opportunity at one of Europe's biggest banks. He was expected to take a cut in salary from an estimated 3.5 million pounds he was paid in 2009.

Analysts said he may have felt thwarted in his ambitions at Santander group, especially with Ana Patricia Botin, who chairs the Santander-controlled Spanish bank Banesto, seen as a candidate to replace her father as chairman.

"Ana Patricia Botin is good ... she is highly regarded in banking circles. Banesto is one of the better quality Spanish domestic banks. She knows her stuff and has done a good job there," said Andrew Lim, analyst at Matrix.

Ana Patricia Botin already has experience of living and working overseas. A former Harvard graduate, she worked for JP Morgan (JPM.N) in the United States for several years during the 1980s before returning to Spain in 1988 to work for Santander .

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