Arab Today, arab today uk lloyds hands out executive bonuses despite £143bn losses
Last Updated : GMT 09:06:17
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State-owned bank under fire after scandal-hit year

UK Lloyds hands out executive bonuses despite £1.43bn losses

Arab Today, arab today

Arab Today, arab today UK Lloyds hands out executive bonuses despite £1.43bn losses

Lloyds is 81% state-owned following the 2008 financial crash
London – Arabstoday

Lloyds is 81% state-owned following the 2008 financial crash London – Arabstoday Britain\'s state-rescued Lloyds bank on Friday posted a 2012 net loss of £1.43bn, rocked by huge compensation for insurance mis-selling, but awarded its boss and staff a large round of bonuses. The loss after taxation, equivalent to $2.16bn or €1.66bn, compared with a shortfall of £2.79bn in 2011, Lloyds Banking Group (LBG) said in a results statement.
The lender, which is 39-percent owned by the taxpayer, added that pre-tax losses narrowed sharply to £570m, from £3.5bn last time around.
In the fourth quarter, it set aside another £1.5bn to cover compensation for mis-selling payment protection insurance (PPI), taking its annual provision to a vast £3.575bn.
The group\'s total bill now stands at £6.775bn, which makes Lloyds the worst affected bank by the mis-selling scandal. It also set aside £400m to compensate clients who were sold interest rate hedging products.
However, stripping out exceptional items, underlying profit surged to £2.6bn in 2012, from £638m in 2011, as the bank cut bad debts, costs and non-core assets. It shed 7,000 jobs last year.
Lloyds also revealed on Friday that chief executive Antonio Horta-Osorio would receive a 2012 performance bonus of £1.485m that will be deferred in shares until 2018, and will be dependent on its share price level.
The bank added that staff would share a total bonus pot of £365m despite the fresh losses. That was three percent lower than in 2011, but will give each employee about £3,900 on average. Cash bonuses are capped at £2,000.
Chairman Sir Winfried Bischoff defended the move, arguing that Lloyds had showed \"restraint\" in its bonus policy.
\"Whilst Lloyds Banking Group continues to show restraint in its annual bonus awards, we believe our employees should be rewarded for their contribution to the further strengthening of the business in 2012,\" Bischoff said.
\"The group continues to make sure that its remuneration structure places the focus on strong customer service and the long-term sustainability of the business.\"
The news comes one day after the bailed-out Royal Bank of Scotland posted a 2012 net loss of £5.97bn after enduring a scandal-hit year, but revealed it would pay out a bonus pool of £607m. RBS is 81-percent owned by the state.
Horta-Osorio\'s bonus, meanwhile, will only pay out if the British government sells at least a third of its stake at 61 pence -- which is the average price it paid during the bank\'s bailout -- within the next five years.
In Friday morning deals, LBG shares dipped 3.70 percent to 52.4 pence on London\'s FTSE 100 index, which was 0.26 percent higher at 6,376.58 points.
Lloyds, sunk by the ill-fated 2008 takeover of rival lender HBOS, was bailed out by the taxpayer at the height of the global financial crisis.
Since then, it has axed more than 40,000 jobs in a bid to return to profitability, and is also seeking to slash the number of countries in which it operates.
\"The substantial progress we made in 2012 means that we are now ahead of our plan to transform the group, and this was reflected in our stronger underlying financial performance in the year,\" Horta-Osorio added in the results statement.
\"Since setting out our strategy in June 2011, we have significantly strengthened the balance sheet, and substantially improved efficiency and focus, while continuing to work through legacy issues.”
\"We are investing in our simple, lower-risk, customer-focused UK retail and commercial banking model, and in value-for-money products and better capabilities to continue to support UK households, businesses and communities.\"
Britain\'s banking sector has faced enormous compensation bills for payment protection insurance, which provided cover for consumers should they fail to meet repayments on a credit product such as loans, mortgages or payment cards.
PPI became controversial after it was revealed that many consumers had been sold it without understanding that the cost was being added to their loan repayments. Britain has since banned simultaneous sales of PPI and credit products.

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