FTSE 100 banking biggie Lloyds Bank (LSE: LLOY) will have a new CEO soon. The present CEO, António Horta-Osório, has resigned. He will transition out by 2021, when his successor will take over. Horta-Osorio’s term since 2011 has coincided with a largely sagging trend for the Lloyds Bank share price. Can fortunes turn for the long-beleaguered stock with a leadership change?
The past informs the present
The Lloyds Bank share price dropped dramatically during the financial crisis. When the new CEO joined in 2011, he already had his hands full with all that had happened since the crisis began. This included the Halifax Bank of Scotland rescue acquisition, which snowballed into a bigger situation. LLOY itself had to be bailed out, making it part owned by the British government.
Much has changed since. LLOY has returned to being a privately owned bank and has done relatively better compared to its peers, according to this Reuters report. But there’s a crisis underway again. Even though Lloyds isn’t directly in the line of fire, like hospitality, tourism, and entertainment businesses, it has been hit by the weak economy.
The Lloyds Bank share price, as a consequence, is currently at around the same levels as it was during the financial crisis. In fact, LLOY’s among the few FTSE 100 shares that hasn’t benefited from the recent stock market rally. And this is when even stocks like cruise provider Carnival have made big share price gains.
Reviving the Lloyds Bank share price
This sugggests that it’s not just the coronavirus crisis that’s dragging down the Lloyds Bank share price. Brexit uncertainty for a UK-concentrated banking entity and the PPI claims fiasco from last year are two examples of other things that have gone wrong. Now there’s the recession in the mix. It’s easy to see why investors are unsure.
I am now keenly interested in knowing what the new CEO’s response will be. Specifically, I’d like to know if they can bring the Lloyds Bank share price back to its pre-2008 crisis levels. One of LLOY’s FTSE 100 peers, HSBC, for instance, is undergoing deep restructuring. Similarly, I’m now waiting to know if LLOY will undertake any measures to make it a more profitable buy for its shareholders.
It’s too soon to say, of course, what will happen next. The outgoing CEO is still at the helm, and will be until early next year. The decision on the new CEO hasn’t been made. The Lloyds Bank share price has barely reacted to the exit news so far. But I reckon it will, over the course of 2020, as the bank’s next steps become clearer. I’ll watch closely for future developments. But for now, I just don’t see enough reason to invest in a stock that doesn’t offer either growth or income.
The post The Lloyds Bank share price may react big to this news. Here’s what I think it means for investors appeared first on The Motley Fool UK.
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Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Carnival, HSBC Holdings, and Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2020