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Lloyds bonuses 'for junior staff' Lloyds bonuses 'for junior staff'
(29 minutes later)
Gordon Brown's spokesman has said that at Lloyds Banking Group, only "the most junior staff, earning an average of £20,000" will get bonuses in 2009. Only the most junior staff at Lloyds Banking Group will receive bonuses this year, the government has confirmed.
The comments came as Lloyds shares were up 0.5% on their first day of trading since the government took a majority stake. The shares had earlier lost 10%. A spokesman for Gordon Brown said that bank staff earning an average of £20,000 will receive payments in 2009.
The government now has a 65% stake in Lloyds, and is to insure £260bn of the bank's toxic loans. The government is to insure £260bn of the bank's toxic loans and now has a 65% stake in Lloyds.
Shares in Barclays were down 5.3%, while RBS was 3.5% lower. Banking stocks took a further hit in Monday trading although Lloyds shares stabilised in afternoon trade following a 10% fall earlier.
Shares in Barclays were down 5.3% amid talk that it would also have to take part in the government's scheme to insure risky assets against further losses.
RBS was 3.5% lower. Last month, it said it would put £325bn of toxic assets into the scheme.
Branch workersBranch workers
Lloyds had earlier said that staff who receive bonuses will earn on average £17,000.Lloyds had earlier said that staff who receive bonuses will earn on average £17,000.
It 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.It 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.
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.
ASSET PROTECTION SCHEME Taxpayers underwrite banks' bad debtsEssentially an insurance schemeBanks pay a fee to take part - Lloyds will pay £15.6bnBanks are liable for initial losses, similar to paying the excess on an insurance claim, and then for 10% of further losses In pictures: How the UK banking crisis unfoldedASSET PROTECTION SCHEME Taxpayers underwrite banks' bad debtsEssentially an insurance schemeBanks pay a fee to take part - Lloyds will pay £15.6bnBanks are liable for initial losses, similar to paying the excess on an insurance claim, and then for 10% of further losses In pictures: How the UK banking crisis unfolded
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 had 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.
Unions have insisted that staff from the former Lloyds TSB deserve their bonuses as that side of the group remained in profit.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.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.
The prime minister's spokesman has stressed that the merger had been the banks' idea.The prime minister's spokesman has stressed that the merger had been the banks' idea.
"As we have made clear consistently, the decision by Lloyds and HBOS to merge was a decision that they initiated," he said."As we have made clear consistently, the decision by Lloyds and HBOS to merge was a decision that they initiated," he said.
"They came to us in September because they needed changes in competition law in order to facilitate this merger.""They came to us in September because they needed changes in competition law in order to facilitate this merger."
'Eliminating risk''Eliminating risk'
Analysts welcomed the insurance deal with the government, but were surprised by the amount that the government's stake in the bank could have to rise.Analysts welcomed the insurance deal with the government, but were surprised by the amount that the government's stake in the bank could have to rise.
"The guaranteed asset protection scheme looks to be very thorough, in terms of virtually eliminating the risk of full nationalisation... but also in terms of diluting the existing shareholders," said Bruno Paulson, analyst at Bernstein."The guaranteed asset protection scheme looks to be very thorough, in terms of virtually eliminating the risk of full nationalisation... but also in terms of diluting the existing shareholders," said Bruno Paulson, analyst at Bernstein.
Lloyds will be responsible for the first £25bn of any losses from the toxic assets and a further 10% of any further losses.Lloyds will be responsible for the first £25bn of any losses from the toxic assets and a further 10% of any further losses.
The government will take on the other 90% and will be paid £15.6bn by Lloyds for doing so, although the payment will be in non-voting "B" shares.The government will take on the other 90% and will be paid £15.6bn by Lloyds for doing so, although the payment will be in non-voting "B" shares.
The government's stake in Lloyds will rise from 43% to 65% if shareholders do not take up an offer to buy £4bn of the government's shares.The government's stake in Lloyds will rise from 43% to 65% if shareholders do not take up an offer to buy £4bn of the government's shares.
It would go up to 77% if the "B" shares were to be converted into ordinary shares.It would go up to 77% if the "B" shares were to be converted into ordinary shares.