| António "waves" and "The beat goes on" OVoodoCorvo.  |
Lloyds CEO António Horta-Osório is taking a £1.7m bonus for
2013 – his counterparts at RBS and Barclays have waived theirs. Photograph:
Carl Court/AFP/Getty Images
|
Lloyds Banking Group chief António Horta-Osório gets
£1.7m bonus
Bank reports statutory profit
of £415m and announces £395m bonus pool to be shared between 91,000 staff
Jill Treanor
The Guardian, Thursday 13 February 2014 / http://www.theguardian.com/business/2014/feb/13/lloyds-bank-ceo-antonio-horta-osorio-bonus-profit
Lloyds Banking Group has awarded its chief executive António
Horta-Osório a £1.7m bonus after declaring itself "a normal bank"
five years after its bailout.
With preparations under way for a sale of the taxpayer's
remaining 33% stake, Horta-Osório played down the impact of Scottish
independence on the bailed-out bank, which owns Bank of Scotland.
The Portuguese banker – who took the top job in March 2011 –
was forced to defend his decision to accept the bonus after union leaders
called on him to follow rivals at Royal Bank of Scotland and Barclays and waive
his payout.
Horta-Osório pointed to last year's 70% rise in the share
price, which allowed the government to sell off part of its stake last
September. There are expectations that a further share sale could begin after
the annual report is published on 6 March. "We are ready to proceed,"
he said. "The market, I think, is ready as well. I came to Lloyds three
years ago to fix this bank and help taxpayers get their money back."
He said he had stabilised the bank after its "quite
precarious" position when he took charge, and declared that Lloyds was now
"a normal bank".
But TUC general secretary Frances O'Grady was unimpressed.
"With Lloyds still owing billions to the taxpayer and the amount it has
had to set aside for PPI mis-selling rising by a whopping £1.8bn, now is not
the time for its chief executive to be taking a multimillion-pound bonus."
Unite national officer Rob MacGregor said the payout to the
boss – in a year when staff pay rose 2% and after 35,000 roles had been lost
since the 2008 bailout – was a "kick in the teeth to the taxpayer".
Horta-Osório will receive the £1.7m share bonus only if half
of the remaining taxpayer holding is sold or if the share price remains above
73.6p – the breakeven point of the taxpayer bailout – for six months. He will
then be required to hold the shares until 2019.
A bonus pool of £395m will be shared between 91,000 staff
and payouts will average £4,500 per worker. The bank insisted the payout pot
had been reduced as a result of the bank's vast bill for compensating customers
for mis-selling payment protection insurance – which has now reached nearly £10bn
– and last year's £28m fine from the Financial Conduct Authority for a
"champagne" bonus culture that potentially encouraged mis-selling.
The bank reported a statutory profit of £415m – and a loss
of £802m after tax – after being rocked by a £3bn charge for PPI mis-selling.
It admitted a week ago that its total PPI mis-selling bill is now £9.8bn and
former boss Eric Daniels is among those facing a potential clawback of bonuses
after the bigger than expected compensation claims.
Lloyds reported a £606m loss a year ago while the underlying
profit for 2013 was £6.2bn, double a year ago.
Horta-Osório's bonus comes on top of his £1m salary,
£500,000 pension contribution and a payout from a long-term incentive plan that
could total £2.9m – half the potential sum – when it is formally revealed next
month.
He has now begun work on a new three-year strategic plan for
the bank, which is being forced to spin off its TSB brand under the terms of
its bailout, in a move that could signal branch closures.
Simon Walker, director general of the Institute of
Directors, which on Tuesday blasted Barclays for paying higher bonuses when
profits were falling, said Lloyds needed to be "sensitive to taxpayer
perceptions when making decisions on remuneration and bonuses".
Horta-Osório agreed it was a "bad principle" to
pay out higher bonuses when profits were down as Barclays had done. Following
calls by Ed Miliband to shake up high street banking by create two new players,
Horta-Osório said this would be achieved by TSB – to be floated in the coming
months – and the separation of Williams & Glyn's from RBS.
However, the Lloyds boss conceded that competition was more
of a concern in the small business banking market, currently being reviewed by
the Office of Fair Trading.
The shares closed down 2% at 81.32p. The bank warned last
week that it would not be able to resume dividends until towards the end of
this year, later than some analysts had hoped.
Ian Gordon, banks analyst at Investec, said: "The
statutory losses are heavier than had been assumed and the forward guidance is
softer than frothier market expectations".
Fine fears at BNP
BNP Paribas, France's biggest listed bank, has set aside
$1.1bn (£660m) to cover a possible fine for breaching US sanctions on countries
including Iran, the latest bank to take a hit to profit from a legal
investigation.
Banks across the world are under investigation for a string
of alleged misdeeds, including fixing benchmark interest rates and manipulating
foreign exchange markets. They are also facing tougher rules in the wake of the
financial crisis.
This month, Credit Suisse set aside SFr514m (£346m) to cover
US investigations, while in January Deutsche Bank blamed legal costs for a
surprise quarterly loss. BNP said on Thursday it had set aside the funds after
talks with the US authorities, though it said there had been no discussion on
the size of any potential penalty.
"We've been doing a retrospective review for several
years and we've basically now presented our findings to the U.S.
authorities," BNP Chief Financial Officer Lars Machenil told Reuters
Insider TV.
Standard Chartered agreed in 2012 to pay $327m (£196m) to
resolve allegations that it violated US sanctions against Iran, Sudan, Burma
and Libya.
BNP shares were down 4.1% to €58.38, the biggest fall on the
STOXX 600 Europe banks index. Reuters
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