Lloyds Banking Group has appointed the head of HSBC’s high street banking division as its next chief executive.

Charlie Nunn will replace Antonio Horta-Osorio, who is stepping down in the summer, and will be expected to get to grips with the potential for negative interest rates – an idea flagged by the Bank of England.

Mr Nunn, a father of four, will start once he can agree a leaving date with HSBC – having a six-month notice period and six-month non-compete clause.

He said: “I feel particularly lucky to be joining Lloyds Banking Group at this important time.

“Lloyds’ history, exceptional people and leading position in the UK means it is uniquely placed to define the future of exceptional customer service in UK financial services.

“I look forward to building on the work of Antonio and the team and their commitment to helping Britain prosper.”

The new boss’s pay is expected to come under heavy scrutiny after his predecessor was criticised over large bonuses and pension contributions. Mr Horta-Osorio took home £4.73 million last year – down on the £6.54 million a year earlier.

Lloyds said Mr Nunn will be paid a basic salary of £1.125 million – down 11.3% compared with his predecessor. He will also receive an annual fixed bonus of £1.05 million, a £45,000 benefits allowance for a car, and medical insurance.

Pension contributions will be set at 15% – down from the 33% Mr Horta-Osorio received and an area of particular criticism because other staff receive far lower contributions.

IoD Convention
Lloyds Banking Group chief Antonio Horta-Osorio addresses the Institute of Directors convention at London’s Royal Albert Hall (Jonathan Brady/PA)

Mr Nunn will also be entitled to a short-term bonus worth up to £1.575 million, or 140% of his basic salary. However, he has waived the chance of getting long-term bonuses worth up to 200% of his salary – opting instead to only receive a maximum of 150%.

The new chief will also get his expected HSBC bonus for the year paid by Lloyds and any share awards he was entitled to will be matched by his new employer.

Banks were banned by the Financial Conduct Authority (FCA) from paying dividends to shareholders during the Covid crisis, leading some to question whether bonuses should be paid to bankers.

HSBC is expected to pay a bonus to executives; Lloyds has agreed to not pay one.

Prior to joining HSBC, Mr Nunn worked for management consultancy McKinsey and previously spent 13 years at Accenture in the US, France, Switzerland and the UK.

The London-based banker is a keen runner, cyclist and squash player and is said to have a fondness for Indian culture, reportedly proposing to his wife on the roof of the Lake Palace hotel in Udaipur.

Charlie Nunn
Charlie Nunn will be paid a basic salary of £1.125 million (Lloyds/PA)

Robin Budenberg, incoming chairman of Lloyds from January, said: “I am excited about Charlie’s vision for Lloyds Banking Group, as well as his passion for and commitment to our purpose of helping Britain prosper.

“Given his career track record, he will bring world-class operational, technology and strategic expertise to build on the strengths of the existing management team. I look forward to welcoming him to the group.”

The bank is currently undergoing a restructuring and closing high street branches as demand falls away, with 56 sites facing the axe.

Earlier this month, it announced plans to cut 1,070 jobs, mainly in its group transformation and retail banking teams.

Bosses said the net reduction would be 730 roles, with 340 new positions created across the business.

It followed a similar announcement in September, with 865 jobs going mainly in its insurance, wealth and retail teams.