Lloyds: A Sinking Ship Without a Captain
Who wants to be a CEO? Well, if you do, call up British banking giant Lloyds (NYS: 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 (NYS: 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 (NYS: 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.
At the time this article was published Fool contributor Shubh Datta doesn't own any shares in the companies listed above. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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