DealBook: Lloyds Chief to Return in January From Medical Leave

Chris Ratcliffe/Bloomberg NewsAntónio Horta-Osório, chief executive of the Lloyds Banking Group.

5:01 p.m. | Updated

LONDON — The Lloyds Banking Group said on Wednesday that António Horta-Osório planned to return to his post as chief executive in January after a two-month medical leave for exhaustion.

Mr. Horta-Osório passed a “rigorous process, including obtaining independent medical advice,” to prove he would be able to manage the bank effectively, and that he would not experience a relapse, Lloyds said in a statement. The bank consulted doctors and shareholders, including the British government, before agreeing to his return.

“He returns with the full confidence of the board,” the chairman of Lloyds, Winfried Bischoff, said in a conference call with reporters. “Antonio realizes that he can’t come back business as usual.”

Mr. Horta-Osório, whose leave of absence began on Nov. 2., is expected to return on Jan. 9.

Mr. Horta-Osório, 47, joined Lloyds in March from Banco Santander, where he ran the British business and had a good track record of adding branches and expanding market share. He quickly moved to turn around the struggling Lloyds and wean it off government aid, saying he would cut some middle management and improve customer service at branches.

But the job soon proved overwhelming, and Mr. Horta-Osório became sleep-deprived. Mr. Bischoff said that Mr. Horta-Osório had a “mild form” of exhaustion, in the doctor’s view.

“He was surprised as we were that this happened,” the chairman said.

As part of his return, Mr. Horta-Osório is looking to streamline his workload, including reducing his direct reporting lines. He also plans to delegate more tasks, according to Mr. Bischoff. The chairman added that Mr. Horta-Osório was eager to return to the bank and had unanimous support from the board.

“He has learned from what has happened,” said Mr. Bischoff. “This is very unlikely to reoccur, and we put structures in place to make it even less likely.”

Mr. Bischoff thanked Tim Tookey, the departing chief financial officer, for taking over as temporary chief executive. Mr. Tookey had been expected to leave Lloyds early next year to join Friends Life, another British financial services company.

In a separate announcement, Lloyds said on Wednesday that it had entered into exclusive negotiations to sell 632 bank branches to the Co-operative Group. NBNK, a financial services firm set up in 2010 by Peter K. Levene, the former chairman of the London insurance market Lloyd’s, is no longer a contender for the branches, Mr. Tookey said.

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