Lloyds Banking Group is set to launch the search for a successor to Sir Victor Blank after he announced yesterday he would step down as chairman.
The bank, which is 43% owned by the taxpayer, confirmed that Sir Victor would not stand for re-election as chairman when his term ends next year. This comes eight months after he oversaw the disastrous merger with HBOS.
Sir Victor said: “I believe it is the right time for the group to appoint a new chairman. I will continue working until my successor is appointed to ensure the successful integration of the two banks.”
The board met after Sir Victor told them of his plans to retire from the role by the annual general meeting in 2010.
It issued a statement, saying: “The board was unanimous in wanting Sir Victor Blank to seek re-election as chairman for another three years. We are very sad about Sir Victor's personal decision to retire, although we respect and understand his reasons for it.”
Lloyds announced the appointment of Lord Leitch as deputy chairman with immediate effect to help the process of appointing a successor.
He was to become the group's senior non-executive director at the annual general meeting next month.
Insiders said the search for a new chairman would begin immediately. One said it was too soon to identify potential candidates, adding the move to install Lord Leitch as deputy was “not an indicator” that he was the front runner. Lord Leitch yesterday backed Sir Victor as a “first-class chairman”.
Sir Victor's decision to step down avoids the potentially tricky issue of facing a re-election vote next month. He has come under pressure from some large institutional shareholders in the wake of the merger he orchestrated as chairman of Lloyds, along with chief executive Eric Daniels, between Lloyds and HBOS.
This has forced the group to seek help from the Government, and sent its share price tumbling. This month, Lloyds warned that losses from bad corporate loans would soar by half to about £14bn this year, primarily from HBOS's portfolio, sending it to a full year loss.
The Government's stake in the Lloyds is managed by UK Financial Investments (UKFI), which was set up last year to manage the state investments in failing banks.
UKFI has consulted with other major shareholders over potential leadership changes. It said in a statement yesterday that it “confirms its support for Sir Victor Blank's re-election at the forthcoming annual general meeting, in the context of its wider support for the Lloyds board, strategy, and executive team lead by Eric Daniels”.
UKFI called Sir Victor a “distinguished chairman” who had led the group through an “exceptionally challenging period and who has been unstinting in his personal determination to make a success of the HBOS merger”.
Sir Victor was made partner at Clifford-Turner, now Clifford Chance, at 26 years old before running Charterhouse, where he specialised in mergers and acquisitions.
He was a director at Royal Bank of Scotland from 1985 to 1993 and has served as chairman of newspaper group Trinity Mirror and retailer GUS.
Sir Victor is a long-standing friend of Prime Minister Gordon Brown, who is believed to have encouraged the deal.
Yet by the time Sir Victor leaves, Mr Brown could be on his way out which leaves Lloyds' future unclear.