Under Antonio Horta-Osorio's leadership, it has been faster to recognize existing problems than its competitors and to embrace changes in the regulatory environment like ring-fencing its investment and retail banks.
If Lloyds is really proactive and wants to restore trust, it will lead the industry and be the first to provide ultra transparency and disclose on an ongoing basis its current global asset, liability and off-balance sheet exposure details.
With this type of disclosure, market participants could see just what problems still lie hidden on and off Lloyds' balance sheet.
In the world of the blind, the one-eyed man is king. Lloyds Banking Group may not exactly be Apple but among competitors with a tendency towards rule breaking (Barclays), inability to notice drug money laundering (HSBC) and computer system failures (Royal Bank of Scotland), Antonio Horta-Osorio at least enjoys some un-occluded vision....
Then there is the question of payment protection insurance mis-selling. Mr Horta-Osorio stole a march on his rivals last year when Lloyds made a £3.2bn provision to cover losses from customer claims. But, despite the leap for the moral high ground, the whole process has now become mired in a muddy gutter packed full of ambulance-chasing lawyers who appear to be entering questionable claims against banks as often as they lodge bona fide ones. Expect Lloyds to increase provisions yet again as they attempt to extricate themselves from the sewers.
Next comes the cost of implementing new rules on ring-fencing retail operations that will be legislated for in the autumn. Lloyds, with a small investment arm, has always been keenest on the Independent Commission on Banking’s proposals which it believes will allow for a greater focus on its strong suits – the Halifax and Lloyds businesses.
Mr Horta-Osorio is readying the bank to bring forward the implementation date when Lloyds will achieve the ring-fence.
As with PPI, the Portuguese banker hopes to front-run his competitors and show that Lloyds does “get” that BMW (bitching, moaning and whining) by the banks is not the best formula for regaining public trust.While compliance with regulation is nice, it is better to proactively adopt ultra transparency. This sends a clear message that Lloyds has nothing to hide.
Lloyds would dearly love to be the first to achieve the change, and well before the notional 2019 deadline.....
Every quarter he sticks to a clear narrative. Lloyds wants to get back to being a very simple, plainest of vanilla retail bank, he says, writing down as rapidly as possible its toxic non-core assets in commercial real estate and concentrating on a core business that achieved 15pc return on equity in the first half of 2012.
If it’s messy and happened BAA (Before Antonio Arrived) get rid of it and tell everyone you are doing so. If it happened AAA (After Antonio Arrived) then ensure it is operating to target....Just how big is the portfolio of toxic non-core assets? How come these assets haven't already been written down?