The credit ratings agency Moody's has fired a warning shot across the bows of Lloyds Banking Group by threatening to downgrade its A1 unsecured debt rating.
Moody's says "the review has been prompted by the significant upheaval within Lloyds' senior management , following the announcement that the current CEO, Antnio Horta-Osrio, has had to take a temporary leave of absence."
Lloyds announced last week that Mr Horta-Osorio had been diagnosed with extreme fatigue due to overwork and had been ordered by his doctors to rest. The announcement wiped £1bn off Lloyds' shareprice even though the Chief Executive promised to return to work before Christmas.
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Moody's issue though is not solely with the unfortunate CEO, it is worried by the perception of a weak management structure at Lloyds, pointing out that Horta-Osorio had only been in place since March and "there have been several high-level management changes since his arrival, including the announcement that the current Chief Financial Officer will leave in February 2012".
That CFO, Tim Tookey, is currently acting Chief Executive, so unless his Portuguese boss returns on time, further management disruption is likely.
In the response to the downgrade a Lloyds spokesperson said: "We note the rationale for the review of our ratings. Lloyds believes it has acted quickly and appropriately following the request of the CEO, Antnio Horta-Osrio, for a short leave of absence. We will be working with Moody's to assure them of the efficacy of our interim management arrangements and our ability to deliver on our strategic aims."
BS
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