Lloyds Executives Won’t Get £2m in Bonuses
In a punitive move against Lloyds Banking Group for mis-selling payment protection insurance (PPI), high-ranking company officials will suffer from the loss of bonuses amounting to £2m.
This has been confirmed by Lloyds Banking, which will cut the bonuses paid to 13 executives, including the former chief executive Eric Daniels who will lose £580,000 after his original £1.45m bonus was cut by 40 percent.
Another four directors will have their bonuses cut by £190,000 to £260,000, while a further eight executives will see an almost £100,000 cut to theirs.
PPI helps borrowers who fell ill or unemployed by covering repayments in case they failed to keep them up. But in practice, those that take out the policies don’t have the eligibility to claim them.
Those customers who were mis-sold PPI will receive £3.2bn, which was set aside by Lloyds, saying it would adjust a proportion of the bonus awards for 2010. Had Lloyds been aware of the mis-selling and the cost of correcting it, the bonus pool and the awards from it would have been lesser.
This is the first time a British bank has taken back bonuses from executives, following a financial performance that was worse than expected.
Lloyds Banking Group owns the Halifax, the Bank of Scotland and the Cheltenham and Gloucester.
When Lloyds will publish its results this Friday, the bank is likely to suffer an expected loss of £3.5bn.
Chief executive, Antonio Horta-Osorio, already said last month that he would defer his annual bonus for 2011.
Previously, the Financial Services Compensation Scheme (FSCS) said there is an expected dramatic rise in the number of consumers making claims for mis-sold payment protection insurance (PPI) over the next year, confirming an increase in volume of PPI claims coming into the FSCS.