Lloyds said the board had “completed a rigorous process, including obtaining independent medical advice, to assess António’s ability to return and effectively lead the group.”
“The independent medical advice has concluded that he has made a full recovery,” the bank said in a statement.
However, it said Horta-Osório had proposed restructuring and reducing the number of direct reporting lines into his role.
This should cut back his management workload and would “strengthen the accountabilities of his senior management team,” the bank said, to “maximise the senior management’s contribution”.
“The board and I are pleased that António has made a full recovery. We are looking forward to his return after the New Year to continue to lead the group,” Lloyds chairman Win Bischoff said.
Meanwhile Lloyds said its preferred option for the sale of 632 bank branches is to sell them to the Co-operative Group.
The mutually-owned Co-op had been in competition with new bank venture NBNK for the assets.
Lloyds will now enter exclusive talks with the Co-op, which runs a financial services division along with a supermarket retail arm.