The appointment is a coup for Lloyds, as Mr Horta-Osorio has built a strong reputation at the Spanish bank after leading a series of bold UK acquisitions and has kept the business in good shape throughout the financial crisis. He had been considered a potential successor to Alfredo Saenz, chief executive of Santander.
Mr Daniels, who had been under pressure to step down since Lloyds' controversial acquisition of HBOS, the troubled lender, said in September that he would retire next year.
Lloyds said on Wednesday that Mr Horta-Osorio would take over in March 2011. The announcement may come as a surprise given that Lloyds had recently signalled that the succession process was still in the early stages.
Mr Daniels returned Lloyds to profitability in the first half of the year and has overseen the bulk of the integration of the HBOS business, acquired at the height of the financial crisis.
However, Mr Horta-Osorio faces a number of big challenges. He will be charged with overseeing the disposal of the UK government's 41 per cent sake in Lloyds and will also have to negotiate the forced sale of 600 of its UK branches, as requested by European regulators.
Mr Horta-Osorio will be in a good position to lead this sale having recently overseen Santander's purchase of 300 retail branches that were sold by Royal Bank of Scotland.
Following a strong first half, Lloyds struck a note of caution on Tuesday about its performance in the third quarter, saying the two drivers of its recovery -- net interest margins and falling impairments -- had only been "modest".
Mr Horta-Osorio's defection is a blow to Santander, which is set to list its UK business on the London Stock Exchange in the first half of next year.
The bank has lined up Ana Patrica Botin, the daughter of Santander chairman Emilio Botin, to replace Mr Horta-Osorio as head of the UK business, though it has yet to announce the appointment.
Source: CNN.com
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