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Lloyds takes back £2m of bonuses paid to executives Lloyds cuts back £2m from bonuses paid to executives
(about 3 hours later)
Lloyds Banking Group is taking back bonuses worth £2m from 10 executives, including the former chief executive Eric Daniels, the BBC has learned. Lloyds Banking Group has confirmed it is cutting £2m from bonuses paid to 13 executives, including the former chief executive Eric Daniels.
Four of those affected were board directors.Four of those affected were board directors.
Mr Daniels is expected to lose between 40% and 50% of a £1.45m bonus, or between £600,000 and £700,000. Mr Daniels will lose £600,000 after his original £1.45m bonus was cut by 40%.
BBC business editor Robert Peston says they are being penalised over their role in the mis-selling of payment protection insurance (PPI). They are being penalised over their role in the mis-selling of payment protection insurance (PPI), which in theory, covered repayments if borrowers were unable to keep them up.
This involved the sale of insurance that, in theory, covered repayments if borrowers were unable to continue repayments through illness or unemployment, but in many cases those taking out the policies would not have been eligible to claim on them. The plans promised help during illness or unemployment, but in many cases, those taking out the policies would not have been eligible to claim on them.
Our business editor says three other board directors are expected to see about £250,000 of their bonus taken from them. Lloyds has been forced to set aside £3.2bn to cover compensation for those customers who were mis-sold PPI.
About six other executives, below board level, would lose around £100,000 each. Lloyds said in a statement that it would make an adjustment to a proportion of the bonus awards for 2010, because if it had been aware of the mis-selling and the cost of putting it right, the bonus pool and the awards from it would have been smaller.
This is the first time a British bank has taken back bonuses from executives, following a financial performance that was worse than expected.
The cut will be made by reducing the amounts already awarded in deferred shares.
Bonuses for 2011 will also be lower than planned.
This is the first time a British bank has taken back bonuses from executives, following a financial performance that was worse than expected.
The return of some of the bonuses, which were demanded by regulators after the banking crisis of 2008, are being made after pressure from politicians and the Financial Services Authority.The return of some of the bonuses, which were demanded by regulators after the banking crisis of 2008, are being made after pressure from politicians and the Financial Services Authority.
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Lloyds Banking Group is the UK's biggest lender and owns the Halifax, the Bank of Scotland and the Cheltenham and Gloucester.Lloyds Banking Group is the UK's biggest lender and owns the Halifax, the Bank of Scotland and the Cheltenham and Gloucester.
It has been forced to set aside £3.2bn to cover compensation for those customers who were mis-sold PPI.
The bank will publish its results this Friday and is expected to announce a loss of about £3.5bn.The bank will publish its results this Friday and is expected to announce a loss of about £3.5bn.
The bank has not yet formally announced its plans for the return of some of the bonus money.
Its current chief executive, Antonio Horta-Osorio, said in January he would not take an annual bonus for 2011.Its current chief executive, Antonio Horta-Osorio, said in January he would not take an annual bonus for 2011.
Our business editor says the move may have a deterrent effect in future, making bankers more likely to consider the consequences when they launch new products or do assorted deals. Our business editor says the retrospective cut in these bonuses may have a deterrent effect in future, making bankers more likely to consider the consequences when they launch new products or do assorted deals.
Chris Skinner, the chairman of the Financial Services Club, said: "It will be interesting to see if other banks follow this lead."