Lloyds Banking Group today named Antonio Horta-Osorio, boss of Santander UK, as successor to outgoing chief executive Eric Daniels.
Horta-Osorio, 46, will join taxpayer-backed Lloyds early next year before taking on the top post at the beginning of March.
Daniels, who is due to step down next year, led Lloyds' takeover of HBOS in September 2008 - a purchase that forced the lender to seek a £17 billion state rescue.
Horta-Osorio has been UK chief executive at Spanish banking group Santander since August 2006, overseeing the group's rapid expansion as it bought Bradford & Bingley's savings business and Alliance & Leicester.
The news will be a shock to investors and analysts, since many had expected the bank to name an internal candidate. Favourites had included Helen Weir, the current head of Lloyds' core UK retail banking division, and finance director Tim Tookey.
City commentator David Buik of BGC Partners says: "I am led to believe this is a great coup for Lloyds Banking Group. He ticks all the boxes. He is a great politician; he'll need to be dealing with UK Investments, the Treasury and the odd rather wayward and volatile member of her Majesty's government.
"He also has great charm; an attribute he would have needed in spades to have dealt so well with Santander's Godfather Emilio Botin for all those years. Also, he has gained enormous experience putting together Santander's portfolio in the UK, starting with Abbey National and adding Alliance & Leicester as well as the deposit base of Bradford & Bingley. So he is infinitely qualified to perform the duties as CEO of Lloyds Banking Group."
On the surprise appointment, Buik adds: "I never even gave him a passing thought - nothing to do with ability or qualification, I just thought he was wedded to Santander. I thought Mr Horta-Osario was like Brighton Rock. Chop him in half and you read 'Santander' written in red! How wrong can you be? Never read a book by its cover!"