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Lloyds to announce staff bonuses Taxpayer deal hits Lloyds shares
(about 2 hours later)
Staff at the majority taxpayer-owned Lloyds Banking Group are due to find out who will receive cash bonuses totalling about £80m ($113m). Shares in Lloyds Banking Group have fallen more than 8% during the first trading session since it became majority-owned by the government.
Members of the board have said they will forgo their payments, and the bank stressed that staff who receive bonuses will earn on average £17,000 ($24,000). The move came as part of a deal that will involve the taxpayer insuring £260bn of the group's toxic loans.
But BBC political correspondent Ian Watson said opposition politicians are likely to question the payments. The government's stake in the bank will rise from 43% to 65%.
The announcement comes days after the government took a 65% share in Lloyds. It comes as staff wait to find out who will receive a share of £80m cash bonuses on offer. Members of the board will not receive bonuses.
This figure - an increase on the previous 43% - was reached after the group had to turn to the Treasury for help following its takeover of HBOS, which recently reported an annual loss of nearly £11bn ($15.5bn). The bank stressed that staff who receive bonuses will earn on average £17,000, but there are still expected to be questions asked about the payments by opposition politicians.
Lloyds shares fell 7% in early trading on Monday, the first time they have traded since the announcement of majority ownership by the government. Branch workers
Average payout Lloyds has insisted that executive directors will forgo their bonuses, and other senior staff will have theirs deferred until at least 2010 - with the possibility that these could be clawed back if performance misses targets.
Lloyds has insisted that executive directors will forgo their bonuses, and other senior staff will have theirs deferred until at least 2010 - with the possibility that these could be clawed back if performance deteriorates.
Staff are graded in eight bands, and it is understood that employees within bands five to eight will receive bonuses in cash.Staff are graded in eight bands, and it is understood that employees within bands five to eight will receive bonuses in cash.
Lloyds said that most of these workers are employed in branches and the average payout would be around £1,000.Lloyds said that most of these workers are employed in branches and the average payout would be around £1,000.
The group added that the deal has been approved by UK Financial Investments, which manages the government's stake in financial institutions. The group added that the deal had been approved by UK Financial Investments, which manages the government's stake in financial institutions.
In addition, unions have insisted that staff from the former Lloyds TSB deserve their bonuses as that side of the group remained in profit.In addition, unions have insisted that staff from the former Lloyds TSB deserve their bonuses as that side of the group remained in profit.
Lloyds Banking Group had to turn to the Treasury for help following its takeover of HBOS, which recently reported an annual loss of nearly £11bn.
By 1120 GMT, Lloyds Banking Group shares were down 8.1% at 38.6 pence.
Other banking shares have also fallen, with Barclays down 10.0% to 58.3p, HSBC down 9.8% at 325.5p and Royal Bank of Scotland falling 8.1% to 18.2p.