Lloyds Banking Group (LLOY) has announced that chief executive António Horta-Osório will step down in June next year after a decade in the post. A replacement has yet to been named. As part of the boardroom shake-up, Robin Budenberg – currently chairman of private US banking company Centerview Partners – will succeed retiring chairman Lord Norman Blackwell in early 2021.
Mr Horta-Osório took the helm in the aftermath of the global financial crisis and has overseen some difficult patches – the unwinding of the government’s £21bn bailout stake to return it to a fully-privatised lender and the payment protection insurance (PPI) scandal for which it has set aside close to £22bn.
The period before his departure will likely be no less tricky in the wake of Covid-19. Analyst consensus – as compiled by FactSet – is for an adjusted loss per share in the three months to 30 June, only improving to break even in the December quarter. Lloyds’ adjusted EPS is projected to come in at just 1.47p in 2020, versus 7.73p a year earlier.
We also recently questioned whether Lloyds was heading for an “economic reality check” – its modelled future economic scenarios from April look increasingly out of sync with the current gross domestic product (GDP) and unemployment trends playing out. These projections matter for Lloyds’ profits, and over optimism could lead to higher impairment charges when its half-year numbers are revealed in July.
Lloyds isn’t the only one making management changes. Over at insurance group Aviva (AV.), chief executive Maurice Tulloch – who was only appointed just over a year ago – will be stepping down with immediate effect due to family health reasons. He will be replaced by Amanda Blanc, who joined the Aviva's board at the beginning of the year.
Ms. Blanc is well-steeped in the insurance world – she previously headed up Axa’s (FR:CS) UK business and Zurich’s (CH:ZURN) European operations, and was the chair of the Association of British Insurers. But she has a tall task to get Aviva back on track – even prior to the ‘Corona-crunch’, the group’s share price performance was rather lacklustre.
Her predecessor unveiled a new strategy last year involving simplifying the group’s structure into five operating divisions. But shareholders were left underwhelmed, having anticipated more sweeping changes. In the wake of Covid-19, there will likely be renewed pressure for the sprawling financial services giant to slim down further, with particular focus on realising the value of its overseas businesses. “Given the markets’ lacklustre response to Tulloch’s restructuring, the pressure [will] mount to do something more radical” says Alan Devlin, analyst at Shore Capital.
Ms Blanc has already hinted at a new direction. She says she wants Aviva “to be the leader in our industry again” and has promised to “look at all our strategic opportunities, and at pace”. Her appointment has been received positively thus far – Aviva’s shares rose by as much as 5 per cent in early trading on Monday.
