Lloyds Banking Group announced it would claw back some executive bonuses after the state-rescued British lender was forced to pay out billions of pounds (dollars) in compensation over mis-sold insurance.
“The board of Lloyds Banking Group announces that it will make an adjustment to a proportion of the bonus awards in respect of 2010 for a number of its senior employees, including five executive directors,” LBG said in a statement.
In total, LBG was clawing back more than £1.63 million (1.95 million euros, $2.59 million) in share awards, while the bank added that 2011 bonuses have been affected for the same reasons.
It said that former chief executive Eric Daniels would lose 40 percent or £580,000 of his £1.45 million share bonus award, while four other current and former directors would forgo sums of up to £262,500.
A further eight executives, below board level, were to be stripped of five percent of their bonus awards.
LBG, which is 40.2 percent owned by the British government after a huge bailout, made the announcement ahead of its annual results on Friday.
In August, the bank took a hit of £3.2 billion after being forced to compensate clients who were mis-sold payment protection insurance (PPI).
In April 2011, British banks lost a high court appeal against tighter regulation of PPI, which provides insurance for consumers should they fail to meet repayments on a credit product such as loans, mortgages or payment cards. PPI became controversial after it was revealed that numerous consumers had been sold the insurance without understanding that the cost was being added to their loan repayments.
Britain has since banned simultaneous sales of PPI and credit products. LBG said Monday’s announcement reflected the assumed impact of PPI compensation costs on the bank’s earnings in 2010.
“The bonus pool for 2011 will reflect a further reduction in respect of the above mentioned provision, which will affect all individuals eligible to be considered for a discretionary bonus for that year,” it added.
LBG’s move will heap pressure on Royal Bank of Scotland to adopt similar measures. Bailed-out RBS, which is 82-percent owned by the taxpayer, will publish its annual earnings on Thursday.
Current LBG boss Antonio Horta-Osorio, who returned to work in January after a break due to fatigue, has already declined his annual bonus amid ongoing public outrage over excessive banking-sector pay at state-rescued banks.
RBS chief executive Stephen Hester was forced to waive his £963,000 annual bonus under intense political pressure from Prime Minister David Cameron.
LONDON, Feb 20, 2012 (AFP)
