Lloyds Banking Group Confirms Bonus Clawback

Published February 20, 2012 2:36PM (EST)

LONDON (AP) — Lloyds Banking Group says it has canceled bonus payments for 13 past and present executives over their involvement in the costly misselling of payment protection insurance.

Lloyds announced on Monday that former chief executive Eric Daniels would lose 40 percent of his bonus for 2010, or about 580,000 pounds ($920,000). The clawback will be implemented through a reduction in the amounts awarded in deferred shares.

The bank said four other directors would lose 25 percent of their bonuses, and eight other senior executives would lose 10 percent.

Lloyds has set aside 3.2 billion pounds ($5.1 billion) to reimburse people persuaded to buy policies which they did not need, by far the biggest provision by any British bank.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

LONDON (AP) — Some present and past executives of part-nationalized Lloyds Banking Group stand to have some of their past bonuses taken away as the bank tries to clean up its image and finances, news reports said Monday.

The Daily Telegraph newspaper said more than 1 million pounds might be clawed back. Former chief executive Eric Daniels could lose at least 360,000 pounds, or a quarter of his bonus of 1.45 million pounds for 2010, the newspaper said.

The BBC said three other current and former directors would lose up to 250,000 pounds while six other executives each stand to lose about 100,000 pounds.

Lloyds Banking Group, which reports full-year results on Friday, said it was not commenting on the reports.

The bank 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.

Lloyds has set aside 3.2 billion pounds ($5.1 billion) to reimburse buyers of the policies, by far the biggest provision by any British bank.

The financial crisis has seen political and public anger focus 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 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.

By Salon Staff

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