Lloyds insists it is right to offer financial
rewards to staff who hit targets
Lloyds insists it is right to offer financial rewards to staff who hit targets Lloyds Banking Group has defended plans to reward retail and commercial staff with bonuses, worth a reported £120m.
Its subsidiary HBOS – bought with government backing last year – is to record a loss of nearly £11bn, raising concerns it may need more state help.
But Lloyds, already 43% taxpayer-owned, said its employees deserved “financial recognition” for hitting targets.
Shadow business secretary Ken Clarke has accused ministers of overseeing a “shotgun marriage” of the two banks.
In most cases staff bonuses would amount to £1,000 or less for employees earning about £17,000 per year, the bank said. The report comes amid speculation that the government – which has already poured £17bn into the group – may be forced to take a majority stake in Lloyds, or even nationalise it.
“We have stretching performance targets and if they are met we believe it is right that colleagues receive some financial recognition” Lloyds Banking Group statement
Mr Clarke accused Prime Minister Gordon Brown of forcing through the tie-up between Lloyds and HBOS, which resulted in “disaster”.
“They should never have been allowed to merge. Lloyds TSB was a boring bank, it was a steady bank, it hadn’t done silly things,” he said.
Former chancellor Lord Lamont also criticised the government for “infecting” a good bank, calling the merger an “absolute scandal”.
However, Labour MP and former Treasury minister Geoffrey Robinson said: “The reality is – and everybody knows this – that we’ve got to get the banks operating again.
“We’ve re-capitalised them and now it’s up to them. I believe that they will do this because if not we shall have to take further measures.”
Chancellor Alistair Darling has insisted the government was forced to act quickly to save the entire banking system from collapse.
While he has not ruled out further taxpayer support for Lloyds, he has stressed that ministers feel banks are “best run in the commercial sector and privately owned”.
Liberal Democrat treasury spokesman Vince Cable has said it looks “increasingly as if Lloyds HBOS will now go into majority public ownership, followed inevitably by nationalisation”.
‘Financial recognition’
Lloyds’ share price plummeted on Friday, after chief executive Eric Daniels revealed the extent of HBOS’s expected losses.
However, the Sunday Telegraph claims Lloyds is still planning to hand over £120m in bonuses to staff.
It said the bank was in talks over the bonuses with UK Financial Investments (UKFI), the Government-owned body which oversees the taxpayer’s stake.
A UKFI spokesman refused to comment on the report.
A Lloyds spokesman said: “We are a retail and commercial bank where most colleagues earn approximately £17,000 a year.
“We have stretching performance targets and if they are met we believe it is right that colleagues receive some financial recognition.
“In most cases this means an annual bonus of £1,000 or less.”
Last week, Prime Minister Gordon Brown’s spokesman said he was “very angry” about proposed bank bonuses and wanted bankers to consider waiving their right to them.
He was speaking after reports suggested taxpayer-saved RBS group was to pay out £1bn in bonuses.
When the Government bought shares in Lloyds/HBOS and RBS last October it secured agreements that there would be no cash bonuses for board members this year.
However, no ban was imposed on payouts for staff below this level.
Unlike the plans being considered by RBS, Lloyds is not believed to be planning payouts for significant numbers of highly-paid City traders.
It is understood any bonus package would be smaller than last year’s reported £150m total.
sourced from The BBC
