One of the interesting effects of the missold payment protection issue is the fact that some of the biggest UK banks are under increasing pressure over the bonuses being paid out to their bosses.
One example of this comes with the Lloyds Banking Group and the £1.45m bonus given to their former chief executive Eric Daniels earlier on in the year. The fact that the giant bank had to set aside an astonishing £3.2bn to cover the expected missold payment protection claims means that the massive bonus has caused controversy.
Lloyds Bank is of course part owned by the UK taxpayers and this has lead to strong claims for the bonus be to clawed back. In total the bank’s 5 executive directors were given more than £5m in bonuses, which have been awarded in the form of deferred share options which can be converted into cash from March of 2013.
As the provision for missold payment protection claims made by Lloyds was the biggest of all of the UK banks this has fuelled protests about the bonuses. The issue is now being looked at by Anthony Watson, who is the head of the Lloyds remuneration committee.
As spokesperson for Lloyds Banking Group said that the bonus was being looked at and would be evaluated “in line with the FSA code”.
A Subject Which Causes Strong Opinions
The ex Liberal Democrat Treasury spokesman Lord Oakeshott added his voice to the weight of public opinion when he opined that the giant bonus should not have been awarded to Mr Daniels in the first place. Lord Oakeshoot is of the opinion that the scale of the missold payment protection scandal should ensure that “no bank chief executive” who had been responsible for the issue arising should have received a bonus payment.
Of the other big banks the Royal Bank of Scotland set aside £850m for future claims while Barclays made a provision of £1bn and HSBC put aside £270m. The fact that Lloyds and the Royal Bank of Scotland are partly nationalised means that their bosses’ payments are under closer scrutiny than the other banks’.
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