Lloyds: A Sinking Ship Without a Captain

Who wants to be a CEO? Well, if you do, call up British banking giant Lloyds (NYSE: LYG  ) . The bank has been leaderless for the past three weeks as Antonio Horta-Osorio is away recovering from stress and exhaustion -- this only eight months after he assumed the mantle of CEO at the London bank. Lloyds is still hopeful that Osorio will return by the end of the year, but in case he doesn't, it has announced that David L. Roberts will take over as interim CEO from the start of next year. Investors, naturally, weren't really excited over any of this news, and shares plunged to a two-and-a-half-year low.

Lloyds behind the 8 ball
Osorio gained recognition as a man who could mastermind a turnaround and reverse the fortunes of struggling banks. Before arriving at Lloyds, Osorio won acclaim for amalgamating a number of ailing British banks under the U.K. wing of Spain's Banco Santander (NYSE: STD  ) and scripting their turnaround. So when he arrived at the lender, most were hopeful that brighter days were ahead for Lloyds, which had to be bailed out during the subprime-lending crisis.

But now he's on the bench. A few days later, the bank reported losses and also announced that it wouldn't be able to meet its financial goals for the year. The bank has lost a massive $6.3 billion for the first nine months of this year. With Osorio at the helm, Lloyds had undertaken a series of cost-cutting measures to trim losses and also relieve itself of government support. But now the vacuum left at the top has thrown everything in disarray.

The stock is down 65% this year overall, including a 22% plunge and after Osorio left on Nov. 2. On Monday, when the news of the interim arrangement came, it was trading at 23.42 pence; to be in the black it needs to trade at 63 pence.

Execs running away?
Finance director Tim Tookey took over as interim CEO when Osorio departed, but he is slated to leave Lloyds for insurer Friends Life in February. The bank's attempt at filling Tookey's soon-to-be vacant position with a high-profile candidate has also drawn a blank. Royal Bank of Scotland's (NYSE: RBS  ) Nathan Bostock was slated to join Lloyds and head its wholesale banking division and was also considered as a serious candidate for the role of finance director, but he backed out at the last minute, possibly because Lloyds was empty at the top. In his place, the bank appointed Royal Sun Alliance's George Culmer as finance director. For now, if Osorio doesn't return as planned, non-executive director David Roberts will take over the reins from Tim Tookey from the start of next year.        

Lloyds must be hoping for its charismatic leader to return soon and save it from sinking further. To follow Lloyds' progress as its sails on without a captain, add the stock to My Watchlist.

Fool contributor Shubh Datta doesn't own any shares in the companies listed above. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (2) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 01, 2011, at 11:05 AM, Duke5343 wrote:

    Lloyds is largest in UK and doing well, still on target to pay back UK gov in 2012, will stick with them

  • Report this Comment On December 04, 2011, at 4:44 PM, Dredu543 wrote:

    Doing well ????

    What an optimistic man !!!!

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1595524, ~/Articles/ArticleHandler.aspx, 8/30/2014 6:20:19 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement