Tale of two bankers as Lloyds' chief says he may turn down £1.4m bonus

Published on Friday 25 February 2011 17:16

THE head of Lloyds Banking Group may refuse his £1.4 million bonus despite leading the business into profit for the first time since the bank collapsed more than two years ago.

Eric Daniels' comments came one day after Stephen Hester, the chief executive of Royal Bank of Scotland, accepted millions of pounds' worth of share options, despite his firm posting losses of more than 1 billion.

Mr Daniels spoke out after the company reported a recovery in high street banking and a fall in the overall cost of bad loans from 24bn to 13bn.

The UK government has a 41 per cent stake in Lloyds Banking Group. Mr Daniels said: "I don't determine my own bonus - this is something the board and the committee decided.

"Based on the strong results this year, they've decided the management - and that includes me - deserve bonuses.

"But they are also deferred and paid in shares and they won't go out until at least 2013, so I think I'll make my decision at that time."

His decision to delay any announcement about bonus payments stood in contrast to his RBS counterpart, who will collect a 2.04m payout for his work during the last financial year.

An RBS spokesman defended chief executive Mr Hester's bonus, even though the UK government has an 84 per cent controlling share in the bank, saying that he would "receive no cash bonus".

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He said: "It is the board's intention that the chief executive's salary will remain unchanged for 2011 at the level set in 2008. He will receive no cash bonus, with the pre-existing arrangements replaced by a new share bank scheme."

Mr Hester has refused to answer questions over the bonus award.

Labour MSP Sarah Boyack said the decision of the RBS chief executive showed the bank seemed "to have learnt nothing" from from the banking collapse in 2008.

She said: "People are outraged that bankers on very high salaries are still getting massive bonuses.

"The reality is that the banks are paying less money this year than under Labour's scheme. So many people are feeling the pinch and the banks seem to have learnt nothing.

"It's a welcome step forward if the head of Lloyds is to forego his bonus. But it shouldn't be his call."

Meanwhile, a body which supports top finance executives, said Mr Daniels should take the bonus he was being offered as his tenure at Lloyds had been "successful".

Chris Skinner, chairman of the Financial Services Club, said the bank's performance had been good enough to justify Mr Daniels taking his bonus. "I think he deserves it," he said.

"He's been there since 2003. This was a shotgun marriage that they had to make work.

"He's made it work.There's a new chief executive coming in March, so as a recognition of his success he has been successful and should take the money."

However, Scottish trade union organiser Tommy Campbell, whose Unite T&G union represents workers in the banking sector, called for an end to "excessive bonus payments" for bankers.

He said: "At a time when the jobs and livelihoods of working people are under such pressure it's wrong that a bonus of this size is even being considered.

"No-one deserves a payment of this sort, whether they are a banker or whatever job they do."