Lloyds makes a loss, but bonuses continue
Lloyds Banking Group loses more than half a billion pounds as a result of the mis-selling scandal – and announces that staff will share a bonus pot of £365m.
Pre-tax losses narrowed from £3.5bn in 2011 to £570m in 2012.
The bank, in which the taxpayer has a 39 per cent stake, attributed the loss to the £4bn it has set aside to compensate people wrongly sold payment protection insurance (PPI) and small businesses sold interest rate swaps.
Chief Executive Antonio Horta-Osorio has been awarded a bonus of £1.5m in shares, but this will be deferred for five years and only paid if the company’s share price remains steady and the government is able to recoup some of the money it spent when it bailed out the bank.
Mr Horta-Osorio said he was “very confident” taxpayers would be reimbursed.
Bonuses
The total bonus pot for staff is 3 per cent down on 2011, with employees receiving £3,900 on average.
Yesterday, Royal Bank of Scotland, which is 82 per cent owned by the taxpayer, revealed losses of £5.2bn and a bonus pot of £600m.
Lloyds said its total provisions for PPI have now reached £6.8bn. Without these payouts, the firm’s profits would have risen from £638m to £2.6bn in 2012.
Mr Horta-Osorio said the group’s sale of more than 600 branches to the Co-operative Bank remained on track, despite reports that the Co-op is battling to plug a potential £1bn hole discovered by the Financial Services Authority.
“Despite underlying improvement in the wider business, the large rise in mis-selling provision has marred otherwise good results,” said Rebecca O’Keeffe, head of investment at Interactive Investor.