Blackfriar: Chief’s absence adds to the stress factor at Lloyds bank

Yesterday the part-nationalised bank said its Portuguese-born chief executive, António Horta-Osório, has asked for up to eight weeks off to recover from illness, understood to be extreme fatigue and stress, due to over-work.

Into his place steps Tim Tookey, the finance director. But Tookey is little more than a sticking plaster: he has already announced plans to leave in February, joining Friends Life.

Horta-Osório, who only formally took the reins in March, is renowned as a workaholic, obsessive about detail.

He joined from Spanish-owned Santander UK, where he led it on an aggressive acquisition streak, including the opportunistic purchase of Bradford & Bingley’s branch network and deposit book. Since taking over at Lloyds, he’s thrown himself into the job. In that time, he’s accelerated the sale of more than 630 branches, known as Project Verde, and fought off demands from the Government-appointed Independent Commission on Banking to beef up the size of the sale.

He has initiated a deep strategic review, which will see more than 15,000 jobs go and promises £1.5bn annual savings by 2014.

He has also steered the bank through a rapidly-changing regulatory landscape, plus overhauled his senior management team.

All this has been done with the Government’s 40 per cent plus shareholding hanging over his head. Some will say that after receiving an £8.3m golden hello, this is what he’s paid for, but Blackfriar has respect for a man who’s prepared to admit his limits and put his health and family first.

It’s not without precedent: Andy Hornby, the former HBOS chief executive, quit pharmacy retailer and wholesaler Alliance Boots because of stress.

But even so, more questions remain than answers. What happens to Project Verde, forced upon Lloyds by the European Union? Is it reasonable to expect Verde to complete by the end of the year, or should Lloyds wait for more benign conditions and steady leadership before selling or floating it?

Will Horta-Osório really return by the new year, or does the bank need to begin the search for a new chief executive now?

Ian Gordon, banks analyst at Evolution Securities, thinks Lloyds’ operations director Mark Fisher is the perfect man for the job if Horta-Osório does not return. “It doesn’t need to hire an external ‘visionary’ – it needs a proven executioner – that man is Mark Fisher, director, group operations. He’s already in the house.”

Blackfriar is sure about one thing: the bank needs to have concrete answers to many of these questions by next Tuesday when it updates the market on third quarter trading.

There’s enough uncertainty in the market without concerns about lack of leadership at the helm of the UK’s biggest high street bank.

n While the recent fortunes of many Aim companies has been patchy to say the least, oil exploration data company Getech this week showed a company going places.

The business is inextricably tied to the oil price, and suffered in 2008/9 when price of the black stuff plunged.

But with oil and gas firms tripping over themselves to spend on finding and extracting increasingly scarce natural resources, the Leeds-based university spin-out has hit a sweet spot, moving back into profit, resuming its dividend and increasing sales.

Getech this week painted a refreshingly different contrast with some of the Alternative Investment Market’s recent Yorkshire sob stories, such as the de-listing of Just Car Clinics and Fuse 8.

Getech has brought in a new heavyweight chairman by appointing Stuart Paton, the former chief executive who sold Dana Petroleum to KNOC for £1.87bn earlier this year.

While some might question the commitment of a former FTSE 250 chief executive to a £5.3m turnover company, Paton is an enthusiastic supporter and has been on roadshows with Getech.

“I genuinely do see the potential in the business,” he said.

The Aim is rightly called the growth market, and theoretically gives ambitious companies access to capital and a diverse array of investors.

Getech had to put its acquisition strategy on hold during the past two years, but Paton has a long track record of acquisitions and will certainly open doors to new investors, especially in the fund management community.

With staff and directors apparently willing to reduce their holdings to free up liquidity in the company’s shares, there’s potential for a share issue to fund growth.

The junior market does not have to be about stagnation and undervalued businesses.

Getech is proving Aim can work – providing companies are prepared to do the leg work.