Lloyds faces shareholder ire over pay and branch closures

Lloyds Banking Group was yesterday forced to defend its strategy of closing branches and reducing opening hours as it faced a backlash from shareholders at its annual general meeting.

The Lloyds Banking Group flag at the former HBOS head office on the Mound in Edinburgh. Picture: Jane Barlow
The Lloyds Banking Group flag at the former HBOS head office on the Mound in Edinburgh. Picture: Jane Barlow

But despite the series of challenges put to management, all resolutions – including executive remuneration – were approved at the Edinburgh event, attended by about 200 people.

Chairman Lord Blackwell told attendees at the Edinburgh International Conference Centre that, overall, the Bank of Scotland owner had made “strong progress” but there is “still much to do”.

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He noted that legacy issues have continued to weigh on results, with the lender last month posting a 44 per cent year-on-year drop in pre-tax profit in the first quarter of this year to £531 million. However underlying profit was down just 6 per cent to £2.05 billion.

Campaigner Michael Baird was one of several shareholders to challenge directors, complaining about opening hours at his local branch in Bonar Bridge, saying it was a “joke” that these have been cut to five hours on a Tuesday.

Baird, who shares a front door with the bank branch, deemed the lender’s local consultation on the matter “cosmetic” and told Blackwell that his salary increase alone “would pay for a branch to be open”.

However, the chairman, who took up the role in 2013, said: “We can’t keep every branch open in every part of the country when usage does not require that.”

He said that several factors, such as the local availability of banks, ATMs and public transport, are taken into account regarding branch provision, with the group responding to the changing needs of its customers, who are increasingly opting for online and mobile banking.

“We have to sensibly balance the needs of individuals in a local community with the way other people are doing their banking via screens and the online network,” Blackwell said, stating that Lloyds had closed fewer branches than its rivals.

Blackwell also highlighted that total bonus awards as a percentage of pre-bonus underlying profit before tax fell to 4.2 per cent for 2015 from 4.5 per cent relating to 2014, and amounted to “significantly” less than its peers.

As detailed in the annual review document, group chief executive Antonio Horta-Osorio, who also addressed the meeting, is set to receive £8.8m for 2015, of which 10 per cent is an annual bonus, down from £11.5m in 2014 when 7 per cent of his total pay package was an annual bonus.

Just 2.33 per cent of votes cast were against the directors’ remuneration report. The highest percentage against a resolution was the notice period for general meetings, at 8.75 per cent, while re-appointment of the auditor was voted against by 2.17 per cent of those cast. Other issues raised by shareholders included gender and ethnic diversity on the banking group’s board.