Lloyds cuts bankers' bonuses after insurance debacle

Mon Feb 20, 2012 10:07am EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Sudip Kar-Gupta

LONDON (Reuters) - Lloyds (LLOY.L: Quote) will slash the bonuses of its former chief executive and 12 other leading members of staff, following an insurance mis-selling debacle at the part-nationalized British bank.

The bank, which is 40 percent owned by the government after a state bailout, said Monday it would reduce the 2010 bonus awards to take into account a 3.2 billion pound ($5.1 billion) provision it made last year over mis-sold payment protection insurance (PPI).

Lloyds' decision to cut the bonuses marks the first time that a British bank has exercised a "clawback" option on executive pay packages since the 2008 financial crisis. It also follows renewed scrutiny from politicians and the general public over bankers' bonuses.

Last month, Lloyds chief executive Antonio Horta-Osorio, who replaced Eric Daniels in 2011, waived his bonus after taking time off work on sick leave. The chairman and chief executive of rival part-nationalized lender Royal Bank of Scotland (RBS.L: Quote) also decided against accepting their bonus payments following intervention from major political parties.

Lloyds said Monday it would cut the bonuses due to be paid out in deferred shares by 40 percent for former chief executive Daniels, by 25 percent for four other directors, and by 5 percent for the others.

Many people are still angered by the fact that a profession which was held responsible for having caused the financial crisis still awards large salaries while elsewhere thousands lose their jobs in a weakening global economy.

Lloyds did not disclose the identities of the other bankers whose bonuses would be cut, but British media reports said those

included outgoing finance director Tim Tookey, former retail banking boss Helen Weir, former head of risk Carol Sergeant and Truett Tate, who is due to retire from the group this month.   Continued...