Posted on 23 Feb 12
Lloyds Banking Group has canceled bonus payments for its former chief executive and a dozen other directors over their involvement in the costly mis-selling of payment protection insurance.
Lloyds, struggling to emerge from part-nationalization, has set aside 3.2 billion pounds ($5.1 billion) to reimburse people persuaded to buy policies that they did not need. That’s by far the biggest provision by any British bank.
Former CEO Eric Daniels will lose 40 percent of his bonus for 2010, Lloyds announced Monday, worth about 580,000 pounds ($920,000). The bank will withhold shares of that value, which were part of his deferred bonus.
Four other directors would lose 25 percent of their bonuses, and eight senior executives would lose 10 percent, the bank said.
Montana-born Daniels, who stepped down a year ago, headed the bank when it took over Halifax/Bank of Scotland, a deal which loaded the company with bad loans and forced the government to intervene.
Lloyds would not confirm the names of the directors, but the Press Association news agency said they were outgoing finance director Tim Tookey, the head of wholesale banking Truett Tate, former retail banking chief Helen Weir and former head of insurance Archie Kane.
All face similar hits on deferred bonuses due for 2011, the bank said.
“The board wishes to emphasize that its decision is based entirely on the principle of ‘accountability’ and in no way on culpability or wrongdoing by the individuals concerned,” Lloyds said.
Lloyds, which reports full-year results on Friday, has been under pressure to cut costs and improve its image after it was ordered, along with several other British lenders, to refund customers for payment protection insurance. A court rejected bankers’ claims that the rules on the insurance should not be applied retrospectively.
The financial crisis has focussed political and public anger on bonuses, particularly at Lloyds, where taxpayers took a 41 percent stake to save the company, and Royal Bank of Scotland where the public stake is twice as large.
RBS Chief Executive bowed to pressure and refused his 2011 share bonus worth 963,000 pounds. Lloyds new chief executive, Antonio Horta-Osorio, has already said he won’t take a bonus for the year.
Barclays PLC, which reported results on Feb. 10, said it was cutting its bonus pool by 25 percent after its net profit for 2011 fell by 15 percent to 3 billion pounds.
Meanwhile, the Financial Services Authority said Monday that it had fined Banco Santander 1.5 million pounds for failing to promptly clarify information on compensation available to investors in certain structured products. The regulator said customers began raising questions in 2008 but Santander did not clarify the position until early in 2010.
None of Santander’s customers had lost money because of the lapse, the FSA added.