British banking first – bonus cuts
- Created on Monday, 20 February 2012 21:12
Lloyds Banking Group is to cut £2 million in bonus payments to 13 executives.
The former chief executive Eric Daniels is to have a 40% drop after his bonus was cut by £580,000 from the original £1.45m.
Its current chief executive, Antonio Horta-Osorio, said in January he would not take an annual bonus for 2011.
This is the first time a British bank has taken back bonuses from executives, following a financial performance that was worse than expected.
Results due on Friday are expected to show a loss of about £3.5bn.
The cuts relate to Lloyds mis-selling of payment protection insurance (PPI). PPI was taken out by many to cover repayments if illness or unemployment struck, but in fact many of the policy owners were not eligible to claim.
As an eventual consequence, Lloyds was forced to set aside £3.2bn to cover compensation for those customers.
It remains to be seen if this jolt to top bankers will have a deterrent effect in future when it comes to launching new products.
Bonuses for another four directors will be cut by £190,000 to £260,000, while a further eight executives will receive about £100,000 less.
But not all Lloyds staff are seeing their bonuses cut back.
Lloyds Banking Group is the UK's biggest lender and owns the Halifax, the Bank of Scotland and the Cheltenham and Gloucester.
