Problems pile up for Horta-Osório at Lloyds
Three months into his reign and the headaches are multiplying for the man drafted in to revitalise Lloyds Banking Group.
Troubled tenure: Lloyds boss António Horta-Osório is conducting a forensic review of operations
During his brief tenure, António Horta-Osório has already had to take an eye-watering £3.2bn hit to cover the payment protection insurance scandal and further heavy losses on the bailed-out bank's Irish loan book.
He is also having to grapple with the Independent Commission on Banking, which seems intent on hacking back the group's position in High Street banking.
As if that were not enough, he is facing up to the grim reality that Lloyds will have to pay substantially more to raise capital over the coming year.
Against this grim backdrop, the Lloyds share price continues to sink since the former Santander UK boss took over from Eric Daniels at the start of March.
The stakes therefore could not be higher as Horta-Osório conducts a forensic review of the sprawling Lloyds empire - not least for the taxpayer.
The government is currently sitting on a near £6bn paper loss on its 41% stake in Lloyds and hopes of securing a profit now hinge on the results of this review, which will be published on June 30.
So far, Horta-Osório has played the mediocre hand he was dealt with some skill. He made a considerable virtue out of necessity by breaking ranks with rivals over the PPI scam, in the process scoring a rare public relations coup.
In a similar vein, Horta-Osório declared that he would accelerate the sale of 600 branches mandated by Brussels in the wake of its ill-fated takeover of HBOS in 2008 and subsequent bailout.
The Project Verde auction is expected to kick off over the coming weeks, with Virgin Money and Clydesdale owner National Australia Bank expected to table bids.
But Horta-Osório may have to retrench even further. The government's Independent Commission on Banking wants Lloyds to offload even more of its High Street outlets, which would further weaken the Black Horse's long-term prospects.
A sale of Lloyds's Scottish Widows has long been seen as neat way for Horta-Osório to bring in some extra cash. But the prospect of an outright sale appears to have receded after Lloyds poached the head of Aviva's UK life business, Toby Strauss, to run Scottish Widows last week.
By the end of March, Lloyds's reliance on emergency funding stood at £70.4bn. All of this will have to be repaid over the next two years but as credit rating agency Moody's warned last week, it will cost substantially more than the Bank of England loans.
Faced with a spike in its own borrowing costs, profit margins at Lloyds can only go in one direction. The road to redemption is winding even further out of view.
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