High Street bank Lloyds TSB has promoted its head of retail banking, Eric Daniels, to the post of chief executive.

Mr Daniels, a US citizen, will replace outgoing chief executive Peter Ellwood at the end of May next year.

Lloyds recruited Mr Daniels last year from Citibank, where he had worked for 20 years after graduating from the prestigious Massachusetts Institute of Technology.

He will take over as Lloyds TSB chief at a time when the bank, like many of its rivals, is facing rising bad debts as risky loans to bankrupt telecoms firms and crisis-torn Argentina turn sour.

Lloyds TSB reported flat profits for the first six months of 2002, and increased its provisions for bad debt to �70m.

Mr Ellwood received a setback last year when UK competition watchdogs blocked Lloyds' attempted takeover of Abbey National.

Lloyds TSB shares were up 2% at 444.5p on Friday morning.