HBOS chiefs got £1m bonuses ‘as going-bust reward’
Seven directors received £914,000 in “change-of-control” payments triggered after the bank’s rescue by Lloyds Banking Group, following its £20.5 billion taxpayer bailout in 2008.
It has also emerged that Sir James Crosby and Andy Hornby – two of the three former HBOS chiefs damned by a parliamentary commission for “catastrophic failures of management” – were on pension schemes that accrued benefits at twice the rate of average workers.
The “executive section” of the HBOS pension scheme allowed them to pocket 1/30th of their final salary for each year they worked at the firm, compared with 1/60th for front-line staff.
Some union members are calling for pension money to be repaid.
Mr Hornby, eligible to start drawing down a £240,000-a-year HBOS pension when he turns 50 in four years, is in the spotlight following Sir James’s decision earlier this week to hand back 30 per cent of his £580,000-a-year pension.
Under the change-of-control payments handed out at the time of the Lloyds takeover, Mr Hornby received £251,000 cash and 7,599 shares – on top of salary, pensions awards and redundancy payments.
Others to receive the payments included Peter Cummings, HBOS’s former head of corporate lending who was fined £500,000 by the Financial Services Authority and banned for life from working in the City. He received £129,000 and 2,051 shares.
MPs are now demanding an inquiry into the handouts.
Ged Nichols, general-secretary of the Accord union, which represents HBOS staff, said the pension arrangements were “absolutely disgusting”. He said: “Even with James Crosby reducing his pension, for a front-line member of staff, they would still have to work for more than 20 years to get what Mr Crosby and some of the other former directors get as a pension for one year.
“Members of my union believe that the pensions should be repaid.”
Mr Nichols said thousands of Lloyds workers had been made redundant and many had lost significant savings, having invested in the company. Returning pensions would help repair some of the damage, he said.
He added: “In fairness to Lloyd’s Banking Group, when it was formed, they told all the executives in the final-salary pension schemes they would have to come out of it. So they don’t have the problem HBOS had.”
Lloyds said the decisions to award change-of-control payments and pensions were made by HBOS before its takeover.
“At the time these arrangements were settled, Lloyds did not own HBOS,” a spokesman said. “All decisions with respect to the redundancy or severance terms applicable to departing HBOS senior executives, including pensions, were made by the HBOS remuneration committee or board of HBOS prior to the acquisition by Lloyds.”
MP John Mann, a member of the Treasury select committee, said the due diligence at the time of the Lloyds/HBOS deal needed to be investigated, while the former bosses should also pay the money back.
He said: “This is taxpayers’ money being used to pay bonuses to bankers that brought down their own bank and cost thousands of ordinary workers their jobs. These are bonuses for going bust.”