Lloyds chief gets £1.5m despite bank being in red

Lloyds TSB losses are down on the previous year - pictured is Lloyds branch in Fountainbridge. Picture: Neil Hanna
Lloyds TSB losses are down on the previous year - pictured is Lloyds branch in Fountainbridge. Picture: Neil Hanna
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The chief executive of Lloyds Banking Group Antonio Horta-Osorio is in line for a £1.5 million shares award even though the financial institution recorded a loss of £570m last year.

Trade unions expressed anger at the size of Mr Horta-Osorio’s bonus after results released yesterday showed that compensating customers who had been mis-sold payment protection insurance (PPI) contributed to the bank failing to get out of the red.

Lloyds staff will share out a £365m total bonus pot, but Mr Horta-Osorio will only receive his share award under certain conditions.

He will receive the bonus once the UK government has sold at least a third of its stake above 61 pence, the average price at which shares were bought during the bank’s 2008 bailout, or if the Lloyd’s share price stays above 73.6p for a given period of time.

Lloyds chairman Sir Win Bischoff said: “He [Horta-Osorio] does not get anything if either of those two conditions are not met”.

There were signs that the bank, which is 40 per cent owned by the taxpayer, is strengthening its position given that the pre-tax losses of £570m in 2012 were an improvement on the £3.5 billion recorded the previous year.

Shares in Lloyds have more than doubled in value since May last year. Last night, they had dipped slightly by 2 per cent to close at 52.6p.

Despite the loss, the improved performance led to observers predicting that the sale of taxpayer-shares in the bank could be moving closer, although the Treasury insisted there was not yet a timetable for doing so.

Yesterday, a Treasury spokesman said: “The government’s strategy remains to see Lloyds continue the progress it has made in reforming itself into a strong and sustainable bank that supports the British economy, which in time can be returned to full private ownership.

“Today’s results show that it is making strong progress in improving its core underlying performance and strengthening its balance sheet, but that there is still work to be done as it continues to deal with the legacy of the past.”

Even though the £365m bonus pot was 3 per cent down on previous levels, the reward that could be handed out to the chief executive was criticised.

Dominic Hook, national officer of the union Unite, said: “Lloyds is still making a loss and it’s tainted by scandal, there is no justification for Antonio Horta-Osorio’s share pot.”

Lloyds said each employee will receive around £3,900 on average, although cash bonuses have been capped at £2,000.

Sir Win said: “We believe our employees should be rewarded for their contribution to the further strengthening of the business in 2012.”

Mr Horta-Osorio, who requested that his bonus is linked to the taxpayer bailout price being achieved, added: “It’s my absolute focus and commitment to get taxpayer money back.”

On an underlying basis, the results showed group profits surging from £638m to £2.6bn in 2012, but bottom-line losses came as it set aside another £1.5bn for compensation relating to PPI.