Lloyds is to reclaim some of the money awarded in bonuses to senior staff in 2010. It spent £3.2bn compensating customers for mis-sold payment protection insurance (PPI) and is now stripping 13 directors who oversaw the scandal, including former CEO Eric Daniels, of a combined £2m.
Daniels will lose £580,000 of his £1.45m bonus. The cuts will affect the deferred element of the 2010 awards that haven’t yet been paid out. It’s the first time since “claw back” compensation rules came in in 2009 that a bank has retrospectively reduced pay.
What the commentators said
This is “important for its deterrent effect”, said Robert Peston on BBC.co.uk. If bankers now start to feel that “there is a serious risk of impoverishment” when their decisions go bad several years on, “it may make them kick the tyres a little bit more assiduously when they launch new products or do assorted deals”.
For a long time after the bail-outs in 2008-2009, banks carried on “much as before”, said John Gapper in the FT. “Now things are starting to bite, both for the industry and the individuals who earn most within it.”
Yet things aren’t biting very hard, said James Moore in The Independent. Two million “doesn’t amount to a hill of beans” compared to the money needed to compensate for PPI.
What’s more, PPI “is small potatoes” compared to the cost to Lloyds of rescuing HBOS, which was almost ten times higher. “We’ve yet to see any claw backs from that little doozy.”
What’s more, the concept of recouping pay should go further. The HBOS takeover was waved through by institutional shareholders – fund managers who are supposed to safeguard and grow people’s savings. “It is not just Mr Daniels who should be giving up his bonus.”