Lloyds Banking Group snaps up Santander UK CEO Antonio Horta-Osorio

The newly-appointed Lloyds Banking Group chief executive is used to swimming in shark-infested waters.

Antonio Horta-Osorio, whose appointment as the new Lloyds Banking Group boss has just been announced, is a keen scuba diver who has taken part in several "shark dives". If Santander UK's recent results are anything to go by, navigating the turbulent waters of Britain's banking industry will have been a similarly invigorating experience for the 46-year-old Portuguese.

Unlike the bank Horta-Osorio is due to join in March 2011, Santander UK has appeared to thrive since 2006, when he took over. After reining in the bank's exposure to consumer lending early on in his tenure, Horta-Osaria went on to oversee the acquisition by Santander (known in the UK as Abbey National until the start of this year) of the Alliance & Leicester and Bradford & Bingley banks.

Horta-Osario's conservative, risk-averse approach to banking mirrors that of Santander UK's parent company, the Spanish Grupo Santander. Grupo Santander is chaired by billionaire Emilio Botin, described as a Murdoch-like figure, who has turned the bank into the largest such institution in the eurozone.

Botin’s daughter, Ana Patricia Botin, a former JP Morgan banker, is seen as his heir apparent. But in the wake of today's announcement, there are predictions Ms Botin, currently chair at the Santander-owned Banesto, will take over from Horta-Osorio after his move to Lloyds.

When Horta-Osorio came to London in 2006, it was not his first time in the UK capital. He worked for Goldman Sachs in New York and London in the early 1990s, focusing on Portuguese corporate finance. Before that he spent four years at CitiBank, followed by a stint at INSEAD, the top-ranking French business school, where he finished first in his class.

In 1993 Horta-Osorio joined Grupo Santander as CEO of Banco Santander de Negocios Portugal. He was subsequently deputed to set up Santander operations in Brazil. From 1999 until 2006 he was chairman of Santander Totta in Portugal.

The positive reception to the news of his Lloyds Banking Group appointment (Lloyds shares were up nearly four points at one point on the day it was announced) is clearly a reflection on his achievement at Santander UK. The Financial Times has described the British subsidiary's performance as "a bright spot for (Grupo) Santander since the financial crisis, in contrast to its more difficult domestic market".

As well as retrenching, and then expanding, his bank's exposure to the mortgage market, Horta-Osorio has cut costs - staffing levels at Abbey were down to 10,000 from 25,000 within three years of the 2004 acquisition. At the end of 2008 Santander announced plans to axe 1,900 jobs at Abbey, A&L and B&B.

Staff contraction has been offset by a growing high street presence. There are now 1,327 Santander branches and 25 million customers. The bank announced in August of this year that it was buying 316 RBS branches.

In February of this year Santander announced pre-tax profits for 2009 of £1.5bn, down on £1.7bn in 2008. Only last week Grupo Santander's chief executive, Alfredo Saenz, confirmed plans to float 20 per cent of the UK subsidiary in the first half of 2011 in an offering expected to generate about £4bn.

Horta-Osorio has also become part of the City establishment since his arrival in the UK. The Bank of England announced in May 2009 that he was to join the BoE's Court of Directors, which manages the bank's business and operations. Other directors include BoE Governor Mervyn King (with whom he is said to have good relations) and Deputy Governor Charles Bean.

In February 2009 he appeared, along with other leading bankers, in front of the Treasury select committee investigating the banking crisis. The Evening Standard noted that he had handled his inquisition "politely but firmly". The previous month, the same newspaper included him in its list of most influential people in London.

Antonio Horta-Osorio's challenge at RBS, where he takes over from Eric Daniels, will be to mitigate the bank's exposure to the housing and borrowing market as government spending cuts hit home. The scale of that challenge will be softened by the £7.1m he could receive in salary and incentives in 2011 – more than double the £3.4m he made in short-term bonus and salary at Santander last year. City figures say he has the charm and political skills to continue to thrive in the shark-infested waters of City banking.