It seems European financier Antonio Horta-Osorio always has a point to prove. After scripting a success story for Banco Santander's (NYSE: STD) U.K. division and making it one of the largest lenders in Britain, Horta-Osorio has now switched jobs to lead the tormented Lloyds Banking Group (NYSE: LYG). And before I get to his achievement at the Spanish bank, read this: The news of his appointment as the new CEO of Lloyds was followed by an immediate jump in the bank's share prices.

In one of my prior articles, I offered up my bullish outlook on Santander. As I see it, Horta-Osorio was the man behind Santander U.K.'s success. The bank was in the news for a string of major acquisitions, and it also managed to increase profits at a time when many banks were having their worst nightmares come true. Profits at the division have more than doubled since 2007.

An uphill task
But Lloyds throws open a plethora of new challenges for the undaunted Horta-Osorio, and perhaps that offer was too much to refuse. Lloyds has yet to completely recover from its bad debts in Ireland, which currently amount to 4.3 billion pounds ($7.0 billion). The chances of its margins showing improvement remain bleak. Besides, the bank thinks a slower U.K. economy and higher funding costs will hamper growth.

Lloyds' takeover of rival HBOS in 2008 generated billions in losses and had to be bailed out by the British government. Lloyds is also burdened with commercial property debt that may need write-offs. The government now has a 41% ownership in the bank, and the country's Independent Commission on Banking is thinking of splitting it up along with other top lenders.

Horta-Osorio's game plan
Horta-Osorio thinks the bank needs an overhaul to get back on track. As a first step, Horta-Osorio has decided to sell off more than 600 branches, which could fetch 3 billion pounds ($4.86 billion). This strategy of shrinking the bank seems quite plausible. I have elaborated on a similar strategy adopted by U.S. banks as a tool to safeguard them in a prior article.

The wait and watch game
Horta-Osorio's long-term plans are not very clear. The challenges I have mentioned prevent me from being too optimistic about Lloyds' future. In spite of this, Horta-Osorio instills a lot of confidence in those who wish to see the British giant grow. He is quite the star these days.

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