The chairman of the Lloyds Banking Group in Britain today confirmed he is to step down from the position before the firm's annual meeting next year.
Sir Victor Blank who said it was “the right time for the group to appoint a new chairman” — has faced criticism over Lloyds’ rescue takeover of HBOS last year.
Lloyds will be loss-making this year as a result of soaring bad debts at HBOS but Sir Victor defended the deal today.
He said: “I will continue working until my successor is appointed to ensure the successful integration of the two banks. This remains — in the medium term — a unique value-enhancing opportunity.”
Lord Leitch, who was appointed deputy chairman of Lloyds with immediate effect following a board meeting today, said Sir Victor was a “first-class chairman”.
“We are very sad about Sir Victor’s personal decision to retire, although we respect and understand his reasons for it,” he said.
Chief executive Eric Daniels added: “Victor has played a very important role as our chairman during a period of significant change for our company and at a time when there has been unprecedented volatility in the markets.”
Sir Victor’s decision to retire comes amid mounting pressure from investors and doubts over the wisdom of the takeover.
Lloyds was a conservatively-run bank known for its strong dividend payouts and risk controls before its fateful decision to rescue ailing HBOS last September.
The combined group is now 43 per cent owned by the British Treasury but this stake could rise as high as 77 per cent under the terms of a deal to put £260 billion of toxic debts — mostly from HBOS — into a taxpayer-backed insurance scheme.
Sir Victor — who became chairman in May 2006 and earned £669,000 in salary and benefits in 2008 — would have faced a significant protest vote over his reappointment at the company’s annual meeting in Glasgow next month.
He called the HBOS deal a “unique opportunity” when the takeover was announced last September — days after the collapse of US investment bank Lehman Brothers triggered a near-meltdown of the financial system.
Amid fears for the future of several institutions, prime minister Gordon Brown waved aside competition concerns over the deal — creating a “mega-bank” with around 3,000 branches and nearly a third of the UK mortgage market.
Both Sir Victor and Mr Daniels have argued the merits of the deal should be judged over the long term, but mounting losses in the former HBOS have punished the bank’s shares.
Sir Victor’s decision to step down will ease the pressure on Mr Daniels.
The chief executive told MPs in February that had Lloyds TSB had longer to study the HBOS books, the group would have spent “somewhere around three to five times” longer on due diligence.
In a trading update earlier this month, Lloyds said charges on corporate loans turned sour would be more than 50 per cent higher this year — mainly due to reckless lending practices at HBOS.
HBOS’s losses on corporate loans reached £7 billion last year — meaning the hit from this business alone is likely to be at least £11 billion.
Agencies