Sir Victor Blank's decision to step down as chairman of Lloyds Banking Group has apparently stunned the City. Really? Surely it's not that much of a surprise. Sir Victor has faced mounting pressure to step down since Lloyds - that conservatively-run bank known for its strong dividend payouts and risk controls - took over ailing HBOS in a rescue bid last September.
The deal, which saved the taxpayer from having to intervene, was viewed as a huge favour to Prime Minister Gordon Brown, who waved aside competition concerns over the deal. The result: a superbank for Britain, and for Sir Victor, a place bang in the middle of the limelight. He initially won plaudits for preventing the collapse of the mortgage lender. But the takeover - and soaring bad debts that came with it - has since crippled Lloyds, and Sir Victor's reputation.
Critics say Sir Victor's decision to go was one to spare his blushes, allowing him to avoid a potentially embarrassing showdown with investors over his re-election at next month's annual meeting. Maybe. But then he has been left with little choice.
Sir Victor had been under pressure for months from angry shareholders - myself one of them. Yet, having met Sir Victor on several occasions, I can genuinely say that I was not one of those calling for his departure. He is one of the most accomplished and dignified businessmen I have met. I believe he carried out the merger in good and honest faith. He has always maintained that the merger would create value for shareholders in due course. Speaking at a British ORT business breakfast in March, he said creating value for shareholders was "something he frets over at night and first thing in the morning. I believe we will recover." With a dominant share of the private banking market, this could well happen. Sir Victor, unfortunately, will not be there to enjoy it.
If there was someone who was going to steer Lloyds to safety, Sir Victor had my vote. It's a shame others were not so convinced. Surely he is not solely to blame. It was Gordon Brown who encouraged him to press ahead with the merger, clearing the way by wavering competition concern and Lloyds shareholders voted it through. Chief executive Eric Daniels led the negotiations that left the bank exposed to HBOS's deteriorating portfolio of commercial loans and mortgages. He later admitted that he had carried out less due diligence than he would have liked.
Sir Victor will step down by June 2010 the latest, continuing to work until his successor is appointed "to ensure the successful integration of the two banks". That said, I bet he sleeps a whole lot better tonight.
