Lloyds Banking Group said Wednesday that Chief Executive Antonio Horta-Osorio is taking a temporary leave of absence owing to illness but is expected to return to his position before the end of the year.
The part state-owned bank said that Horta-Osorio decided to step back from his position following medical advice, while a person familiar with the matter said that the executive was suffering from extreme fatigue due to overwork.
Lloyds said that Group Finance Director Tim Tookey has been appointed as interim group chief executive during Horta-Osorio's temporary leave of absence. The bank said Tookey would continue with his current responsibilities alongside his new role.
Lloyds shares were recently down 4.5% at 29 pence, making it the worst performing stock among the bank's domestic peers.
The installation of Tookey as interim chief was expected by analysts, even though Tookey in September said he was leaving the bank to become chief financial officer of Friends Life, the U.K. life assurance project created by Resolution Ltd.
Tookey was previously expected to continue in his role until the end of February 2012, and his departure heralded a clean sweep of the executive team inherited by Horta-Osorio.
Horta-Osorio joined Lloyds in January from Banco Santander SA's U.K. unit, and was working through a recovery plan to shed the bank's 41% state ownership after taking over as chief executive on March 1.
Guardian Stockbrokers said this setback only magnifies the grave situation in the bank's turnaround, as Horta-Osorio was just starting to organize the business for future growth.
This story first appeared on WSJ.com.Peter Nurse contributed to this article.