Business

Executives' slice of the pie gets smaller too

Jill Treanor

The bailed-out British Lloyds Banking Group has revealed it had plunged to a £3.5-billion loss last year and would pay out £375-million in bonuses.

The bailed-out British Lloyds Banking Group has revealed it had plunged to a £3.5-billion loss last year and would pay out £375-million in bonuses.

The chief executive, Antonio Horta-Osorio, reiterated that the prolonged low-interest-rate environment would mean some key targets would not be met on time, but the bank would benefit from a faster than expected reduction in impairment charges during 2012.

At 35.6 pence the shares were among the biggest fallers in the FTSE 100, down 2.4%. The drop has left British taxpayers with a £10-billion loss on the 41% stake in the bank amid concerns about its forecasts this year for profitability, measured by so-called net interest margin.

About 30 000 jobs have already been lost as a result of the rescue takeover of HBOS bank in September 2008 and Horta-Osorio earmarked a further 15 000 reductions when he took over a year ago. But the bank emphasised that a further £200-million of cost savings for 2014 would not result in further redundancies, with 3 700 of the 15 000 roles already removed.

Unite trade union’s national officer, David Fleming, said: “It is vital that Lloyds Banking Group stops attempting to make scapegoats out of its workforce to make short-term cost savings.”

Horta-Osorio returned to work last month after a two-month absence. His predecessor, Eric Daniels, bowed out last February claiming a £2.2-billion profit for 2010 on what was his preferred “combined” measure of the business that was intended to strip out the costs of the takeover. The 2011 loss of £3.5-billion compares with a profit of £281-million a year ago, whereas on Daniels’s measure the profits were up 21% at £2.7-billion.

The loss on a statutory basis had been expected. At the interims, Lloyds reported a £3.3-billion loss when the £3.2-billion provision for payment protection insurance knocked performance.

Daniels is now having 40% of his £1.45-million bonus for 2010 clawed back because of the impact of the payment protection insurance provision. Tim Tookey, the finance director, is losing 25%. He is leaving the bank without any start date yet arranged for his successor, George Culmer, who is quitting insurer RSA in May.

The targets for return on equity—to achieve up to 14.5%—will be delayed beyond 2014 and income will be lower this year than last. But the bank will deliver its balance sheet, cost and impairment targets in 2014 and in some cases sooner.

The £375-million bonus pool is down 30% on a year ago and the executives are taking an average 50% cut to their bonuses.—

Topics In This Section

Comments

blog comments powered by Disqus