Horta-Osório will join the group in early 2011 and take over the top role on 1 March. He has been at Madrid-based Santander since 2006, leading its expansion into the UK market, including the integration of Abbey, Alliance & Leicester and the Bradford & Bingley savings business.

Among other positions he holds at the Spanish banking giant are executive vice president of the group and a member of its management committee.

Daniels, meanwhile, has been at the helm of Lloyds since 2001, a period which has seen it become partly state-owned after it acquired debt-laden HBOS at the height of the credit crunch. Despite the group delivering a pre-tax profit of £1.6 billion (around $2.6 billion) for the first half of this year, Daniels has been under pressure to step down, according to media sources. He informed the board he would retire in September.

Santander is reportedly bringing in Ana Patricia Botin, daughter of Santander chairman Emilio Botin, as the new head of its UK operations.