This could be the start of a trend of sorts.
According to multiple reports in several British newspapers, the Lloyds Banking Group has exercised an option to take back a part of the large bonus packages awarded to senior directors during 2010. Moreover, they may, depending on the "clawback" and future performance, award reduced bonuses for serving senior officials for the year 2011. There seems, however, to be a slight confusion in the numbers.
A report from The Guardian speculates that as many as 10 former employees will be asked to return differ-ing parts of their bonuses for 2010. The report also says the total recall amount is approximately 40 percent to 50 percent of the entire amount awarded; however, there are fears that after ongoing discussions on Sunday night that figure could drop to as low as 25 percent. Meanwhile, another report in The Telegraph says only 5 senior bankers will be affected.
In either case, those who will lose money include Eric Daniels, Lloyds' former Chief Executive (at least £360,000); Tim Tookey, the outgoing Finance Director (£235,000); Truett Tate, the former Head of the retail bank (£260,000); and Carol Sergeant, former Head of Risk (approx. £100,000). The Telegraph report includes Helen Weir, another former Head of the Retail Banking division (unspecified in The Telegraph report but £218,000 according to a report in The Sun).
Incidentally, this is the first time any bank has exercised this particular option. The feeling, apart from one of intense pressure and scrutiny from the government and civil activists, must also be fuelled by reports in The Daily Mail that current Chief Executive Antonio Horta-Osorio has something of a conscientious streak in him. Apparently he voluntarily gave up a £2.4 million bonus earlier this year because he had taken a leave of absence brought on by exhaustion and felt his rewards should be in proportion to his customer's prosperity.
In an earlier report by The Telegraph, it was noted that Lloyds' (41 per cent of which is owned by the taxpayers) was expected to announce staggering pre-tax losses of £4 billion for 2011. This followed a declaration of profit of £281 million in 2010. The loss was driven almost entirely by a hit of £3.2 billion incurred in the PPI scandal.
The problem underpinning the entire furore over recalling bonuses is apparently that rising from Lloyds' involvement in the Payment Protection Insurance (PPI) mis-selling scandal.
The PPI scam involved selling insurance policies alongside loans; these policies were, theoretically, meant to cover repayment schedules if the customer was unable to make payments on his/her own. Predictably, the product sold very rapidly. Moreover, it wasn't just Lloyds' who got caught in the PPI mess. The Telegraph notes that Barclays, the Royal Bank of Scotland (RBS) and other banks said they would reflect PPI losses in bonuses for 2011.
According to a BBC Watchdog report, the concerned banks will be forced to pay compensation to their customers. Lloyds' and Barclays have report-edly set aside full sums of £3.2 billion and £1 billion, respectively, while RBS and HSBC have confirmed sums of £850 million and £269 million on their parts.
Meanwhile, the Financial Services Authority (FSA) has estimated that an individual to whom a single-premium policy was mis-sold (with costs paid upfront) would be repaid approximately £1,800. Policies with regular premiums might return £900.
According to multiple reports in several British newspapers, the Lloyds Banking Group has exercised an option to take back a part of the large bonus packages awarded to senior directors during 2010. Moreover, they may, depending on the "clawback" and future performance, award reduced bonuses for serving senior officials for the year 2011. There seems, however, to be a slight confusion in the numbers.
A report from The Guardian speculates that as many as 10 former employees will be asked to return differ-ing parts of their bonuses for 2010. The report also says the total recall amount is approximately 40 percent to 50 percent of the entire amount awarded; however, there are fears that after ongoing discussions on Sunday night that figure could drop to as low as 25 percent. Meanwhile, another report in The Telegraph says only 5 senior bankers will be affected.
In either case, those who will lose money include Eric Daniels, Lloyds' former Chief Executive (at least £360,000); Tim Tookey, the outgoing Finance Director (£235,000); Truett Tate, the former Head of the retail bank (£260,000); and Carol Sergeant, former Head of Risk (approx. £100,000). The Telegraph report includes Helen Weir, another former Head of the Retail Banking division (unspecified in The Telegraph report but £218,000 according to a report in The Sun).
Incidentally, this is the first time any bank has exercised this particular option. The feeling, apart from one of intense pressure and scrutiny from the government and civil activists, must also be fuelled by reports in The Daily Mail that current Chief Executive Antonio Horta-Osorio has something of a conscientious streak in him. Apparently he voluntarily gave up a £2.4 million bonus earlier this year because he had taken a leave of absence brought on by exhaustion and felt his rewards should be in proportion to his customer's prosperity.
In an earlier report by The Telegraph, it was noted that Lloyds' (41 per cent of which is owned by the taxpayers) was expected to announce staggering pre-tax losses of £4 billion for 2011. This followed a declaration of profit of £281 million in 2010. The loss was driven almost entirely by a hit of £3.2 billion incurred in the PPI scandal.
The problem underpinning the entire furore over recalling bonuses is apparently that rising from Lloyds' involvement in the Payment Protection Insurance (PPI) mis-selling scandal.
The PPI scam involved selling insurance policies alongside loans; these policies were, theoretically, meant to cover repayment schedules if the customer was unable to make payments on his/her own. Predictably, the product sold very rapidly. Moreover, it wasn't just Lloyds' who got caught in the PPI mess. The Telegraph notes that Barclays, the Royal Bank of Scotland (RBS) and other banks said they would reflect PPI losses in bonuses for 2011.
According to a BBC Watchdog report, the concerned banks will be forced to pay compensation to their customers. Lloyds' and Barclays have report-edly set aside full sums of £3.2 billion and £1 billion, respectively, while RBS and HSBC have confirmed sums of £850 million and £269 million on their parts.
Meanwhile, the Financial Services Authority (FSA) has estimated that an individual to whom a single-premium policy was mis-sold (with costs paid upfront) would be repaid approximately £1,800. Policies with regular premiums might return £900.