Lloyds poaches its new boss from HSBC

The high-street lender has appointed Charlie Nunn, HSBC’s head of wealth management, to be its new CEO. He faces a towering in-tray. Matthew Partridge reports

Lloyds Banking Group has “poached” HSBC’s Charlie Nunn to be its next CEO, replacing outgoing boss António Horta-Osório, “one of Britain’s best known executives”, say Harry Wilson and Stefania Spezzati on Bloomberg. This reinforces Horta-Osório’s strategy of making a “bigger push into managing money for individuals” in order to diversify the bank’s revenue: Nunn is HSBC’s head of wealth and personal banking.

Lloyds shouldn’t assume that boosting sales by expanding wealth management services is a surefire route to success, says Lex in the Financial Times. Even if it does become one of the top three providers in the UK, it will be “tough” to make a lot more money from it given that fees in the industry are in long-term decline and top-quality wealth managers “remain costly”. Meanwhile the bank will have to deal with the effects of Covid-19, which has wiped out “the income equivalent of 40% of the past year’s cost base”. Given these problems, “a recovery to pre-pandemic levels of business” may be the best it can hope for.

An opaque transition process

The situation is also complicated by the fact that despite the supposedly “rigorous” selection process, Lloyds is not only unable to say “when Nunn will actually be joining” but also “remains unsure as to when Horta-Osório is off”, says Ben Marlow in The Daily Telegraph. It has already admitted that “there may be a period where neither of them are running it”, with chief financial officer William Chalmers stepping in as an interim CEO. Still, maybe Lloyds shareholders should be thankful that Horta-Osório isn’t staying on forever. The share price has halved since he took over.

The delay won’t stop Nunn from having to deal with some potential public-relations disasters next year, says Kalyeena Makortoff and Julia Kollewe in The Guardian. Chief among them is the fallout from a £245m loans scam run from the Reading branch of HBOS, which Lloyds took over in 2009. While six of those involved in the crime have been jailed, Lloyds is “still trying to complete a compensation programme” and is awaiting the results of an inquiry into allegations of a cover-up. Nunn is also likely to face continued criticism over his pay, even though it is lower than Horta-Osório’s package, which prompted “stinging criticism” from MPs.

Good public relations is particularly important given that Lloyds, like other banks, faces a nasty dilemma thanks to the “pile of bad debts” from the various emergency-loan schemes, says Katherine Griffiths in The Times. While the government made it clear that it would guarantee the loans, the terms and conditions require lenders to “try to recover them before they can claim on the guarantees”. But if they push too hard for repayment, they face a “public backlash”. Either way, Nunn can expect “uncomfortable” public appearances before the Treasury select committee and “behind-the-scenes pressure” from ministers about how to treat customers.

Most Popular

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism
Economy

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism

Russell Napier talks to Merryn about financial repression – or "stealing money from old people slowly" – plus how Asian capitalism is taking over in t…
16 Jul 2021
Three companies that are reaping the rewards of investment
Share tips

Three companies that are reaping the rewards of investment

Professional investor Edward Wielechowski of the Odyssean Investment Trust highlights three stocks that have have invested well – and are able to deal…
19 Jul 2021
The future belongs to emerging markets – three EM stocks to buy now
Share tips

The future belongs to emerging markets – three EM stocks to buy now

Professional investor Carlos von Hardenberg of Mobius Capital Partners picks three of his favourite emerging-market stocks.
5 Jul 2021