Lloyds claws back bonuses after PPI scandal
Lloyds Banking Group is clawing back £2m from bonuses paid to five executives in 2010, including former chief executive Eric Daniels.
The state-backed bank is stripping some of the former influential managers of part of their awards, as punishment for their role in the sale of Payment Protection Insurance (PPI).
The so-called PPI was an insurance plan often sold with personal loans or mortgages that promised to pay out if a borrower was unable to meet their repayments due to unemployment or illness. Problems arose from the policy often being mis-sold, tacked on to loans. In many cases, customers taking out the policies would not have been eligible to claim on them.
After Lloyds broke ranks with the industry and agreed to refund customers last year, UK banks set aside more than £6bn.
This is the first case of a bank reclaiming bonuses awarded to top executives since 2009, when the FSA (Financial Service Authority) was forced by furious MPs to announce new “clawback” rules after the crisis began.
The move by Lloyds, following pressure from the FSA, is likely to increase the pressure on other banks, including Royal Bank of Scotland and Barclays, to take action against their top management.
Mr. Daniel, Lloyds’ former chief executive, considered his £1 million salary modest, but now will have to sacrifice £360,000.
Among the other bankers involved, business banking chief Truett Tate, who resigned earlier this month with an £800,000 payoff, will hand back £260,000. Finance chief Tim Tookey will give up £235,000 and Helen Weir, ex head of retail, £218,000. A fifth director Carol Sergeant, former “head of risk”, will give back around £100,000.
Lloyds’ current chief executive Antonio Horta-Osorio already stated in January that he would not take an annual bonus for 2011.