UK: Mis-selling provisions leave Lloyds Banking Group in the red
- Credit: PA
LLOYDS Banking Group boss Antonio Horta-Osorio has been awarded a £1.5million shares bonus while staff will share a £365m total pot despite further losses in the wake of mammoth provisions for mis-selling claims.
The taxpayer-backed bank remained in the red with pre-tax losses of £570m in 2012 after setting aside £3.6bn for compensation relating to the payment protection insurance (PPI) scandal and £400m for the mis-selling of interest rate swaps to small businesses.
Lloyds said Mr Horta-Osorio’s bonus has been deferred for five years and will only be paid out if shares reach and remain at 73.6p for a sustained period, or if the Government is able to sell at least a third of its stake at a profit.
Lloyds, which is 39% taxpayer-owned, said staff will share out a £365m bonus pool, down 3% on 2011, giving each employee around £3,900 on average. It said cash bonuses have been capped at £2,000.
Mr Horta-Osorio confirmed that he requested for his bonus to be linked to Lloyds shares and the price paid by the Government.
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His award will pay out if the Government sells at least a third of its stake at 61p, the average price at which the stake was bought during the bank’s bailout at the height of the banking crisis, within five years.
It comes amid reports that the Government is preparing to start offloading its 39% stake in Lloyds when shares, which closed last night at 54.5p, reach the 61p break-even level.
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While he declined to comment on the Government’s plans for the stake, he said he was “very confident” taxpayers will recoup their cash.
But the bonus awards are likely to raise further questions over pay at state-backed players after Royal Bank of Scotland yesterday said it was paying staff £607m in bonuses despite reporting losses of £5.2bn for 2012.
Lloyds said its total provisions for PPI have now reached £6.8bn, after another £1.5bn in the fourth quarter alone, while it added another £310m for swap mis-selling claims in the final three months of 2012.
On an underlying basis, the results showed group profits surging from £638m to £2.6bn in 2012.
Mr Horta-Osorio insisted the group’s sale of more than 600 branches to the Co-operative Bank remained on track in spite of reports earlier this week that the Co-op is battling to plug a potential £1bn capital hole discovered by the Financial Services Authority.
He said the Co-op remained “absolutely committed to this deal” and confirmed Lloyds will be separating the branches under the TSB brand on the high street by August in preparation to be offloaded.