© Reuters. Charlie Nunn, chief executive officer of HSBC Wealth and Personal Banking division poses for a photograph in London
By Carolyn Cohn and Iain Withers
LONDON (Reuters) – Britain’s biggest domestic lender Lloyds Banking Group (LON:) has named Charlie Nunn, currently head of wealth and personal banking at rival HSBC, as its next chief executive.
Nunn will replace long-standing Lloyds boss Antonio Horta-Osorio who said in July he would step down next year after a decade at the helm.
Nunn will be charged with steering Lloyds, seen as a bellwether for Britain’s economy, through the fallout from the COVID-19 pandemic and an era of rock-bottom central bank interest rates.
Despite taking hefty provisions against potential loan losses this year, analysts say Lloyds, like its rivals, faces further pain as government support for jobs and businesses is withdrawn next year.
Shares in Lloyds, which said earlier this month it is cutting more than 1,000 jobs, are down 40% this year, although they have rallied a third since the start of November following news of breakthroughs in the race to find a vaccine against COVID-19.
Lloyds shares gained 1% on Monday.
Analysts welcomed the appointment but said Nunn may not take up his new job for almost a year, after Lloyds said he was subject to a six-month notice period and a further six months of restrictions.
“It does mean that Lloyds will be without a CEO as they start a critical 2021 where a fundamental shift in strategy is clearly necessary to address the markedly lower revenue given the unexpectedly low interest rate environment,” analysts at KBW said in a note.
Lloyds said CFO William Chalmers would become acting CEO if Horta-Osorio left the bank before Nunn joins.
“We see this as a strong appointment, likely leading to a major strategic evolution at Lloyds which we see as necessary,” Goodbody analyst Colin Jackson said in a note.
Nunn, a former McKinsey and Accenture (NYSE:) consultant, who joined HSBC in 2011, was appointed to his current role earlier this year following a management reshuffle by CEO Noel Quinn.
Nunn, 49, grew up near Southampton in Southern (NYSE:) England and is married with four children.
At HSBC, colleagues said he was known for his structured approach and for a focus on upgrading digital capabilities. He emerged in February as one of the winners of HSBC’s latest executive reshuffle, taking over the bank’s newly combined wealth and personal banking divisions.
HSBC said in a separate memo that Nuno Matos, currently head of its non-ringfenced British arm, is to replace Nunn.
At Lloyds, Nunn will receive a lower pay package than his predecessor. Lloyds said he had agreed to lower bonuses than the policy allowed, reducing his maximum potential pay by 20%.
This would limit his pay to around 5 million pounds, compared with the 6.3 million pound limit calculated by investor advisory group ISS for Horta-Osorio.
Incoming chairman Robin Budenberg has also asked for his pay package to be cut by 20%, Lloyds said.
Lloyds’ pay policy for senior executives has faced long-running criticism. One third of balloted shareholders voted against the bank’s pay policy at its investor meeting in May.
Nunn will receive a basic annual salary of 1.1 million pounds ($1.50 million) and a fixed share award of 1.1 million pounds, in addition to flexible benefit funding of 4% of basic salary, Lloyds said in a statement.
His pension has been set at 15% of his salary.
($1 = 0.7496 pounds)