Lord Davies to turn down Lloyds top job

THE RACE for the chairmanship of Lloyds Banking Group is set to narrow, with trade minister Lord Davies likely to pull out of the running in favour of staying in the parliamentary role he was given by Gordon Brown earlier this year.<br /><br />Davies, who stepped down as chairman of Standard Chartered to join the government, is understood to have been offered the job by UK Financial Investments &ndash; the body which manages the government&rsquo;s stakes in banks.<br /><br />&nbsp;But Davies is believed to be preparing to reject a position that is increasingly being seen as a poisoned chalice, given the bank&rsquo;s recent woes.<br /><br />Lloyds said earlier this year that it expects to make a loss for two financial years, due largely to mounting loan defaults on the corporate lending portfolio it took on with the purchase of HBOS.<br /><br />Lord Leitch, who recently became the bank&rsquo;s senior independent director, had been seen as a natural successor to current chairman Sir Victor Blank, but is believed to have fallen out of the running.<br /><br />With Davies now almost certainly out of the picture, Sir David Walker &ndash; who conducted a review for the government into corporate governance at banks &ndash; has emerged as the favourite to take the job.<br /><br />Other names in the frame include Standard Life chairman Gerry Grimstone and Harvey McGrath, the chairman of Prudential. Blank has already paid the price for his part in engineering the HBOS deal, announcing his resignation earlier this year.<br /><br />But his successor will also face the prospect of a clash with chief executive Eric Daniels who some investors say should also be ousted.<br /><br />Daniels admitted in the aftermath of the HBOS transaction that the bank had not done enough due diligence on the deal, due to laws preventing it from having full access to the Scottish bank&rsquo;s books.