Business News

Britain's Lloyds Bank to take bonuses back from bosses

Feb 20, 2012, 16:02 GMT

London - Lloyds Banking Group has become the first of Britain's big banks to claw back some of the bonuses already awarded to top executives, the state-backed bank confirmed Monday.

Lloyds said in a statement that it would make 'adjustments to the proportion of bonus awards' made to 13 executives in 2010, including its former chief executive, Eric Daniels.

The overall sum to be retrieved in this way was estimated to be 2 million pounds (3 million dollars), according to estimates. There would also be reductions in the 2011 bonus pool, Lloyds said.

Lloyds said Daniels would lose 40 per cent - or 580,000 pounds - of his award of 1.45 million pounds. Four other current and former directors would have to forego sums of up to 262,500 pounds and eight other executives would be stripped of 5 per cent of their bonus awards.

It is the first time since the credit crunch crisis in 2008 that a bank has used the claw back clause, amid pressure from politicians and the Financial Services Authority (FSA) watchdog.

In the case of Lloyds, the measure was taken in response to provisions set aside in connection with a scandal linked to the sale of credit insurance protection policies, which has hit a number of leading banks.

Lloyds has set aside 3.2 billion pounds for compensation payments resulting from the sale of so-called payment protection insurance.

'The board wishes to emphasise that its decision is based entirely on the principle of 'accountability' and in no way on culpability or wrong-doing by the individuals concerned,' said the Lloyds statement.

Lloyds, which is 41 per cent state-owned, is due to publish its 2011 annual result on Friday, when it is expected to announce a loss of 3.5 billion pounds.

Lloyds is widely seen as having overreached itself with the 2008 emergency merger with HBOS (Halifax Bank of Scotland) which turned the new 'superbank' into Britain's biggest lender.