"When I got here, the bank was a time bomb," says António Horta-Osório, chief executive of Lloyds Banking Group. "We had £700 billion of banking assets and £300 billion of wholesale funding, half of which was short-term with an average tenor of two months." He pauses and reflects. "The bank was in danger of going bankrupt."
Aside from all the challenges of cleaning out a toxic loan book, Lloyds was faced with the height of the eurozone crisis, which meant there was a real risk of the short-term money markets closing.
That was in January 2011, when Horta-Osório joined Lloyds as its chief executive. Lloyds was, by anyone’s standards, a mess. Its ill-conceived takeover of HBOSduring the financial crisis, led by former chairman Victor Blank and CEO Eric Daniels, had turned what was once the most admired bank in the UK into a pariah that had been forced to take a bailout from the UK government, which now owned almost half of the bank. But even in those bleak days, just how bad a situation the bank was in was not widely known. "The worst, most dangerous times for Lloyds were not in 2008/9; they were in 2011 as we had to repay the special liquidity scheme funds to the Bank of England within 12 months," says Horta-Osório.