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'Arrogant' Lloyds to pay bonuses despite bail-out
Jonathan Prynn, Consumer Affairs Editor21.10.08
LLOYDS TSB has been accused of arrogance after telling staff they will get bonuses this year despite the government crackdown on rewards at banks receiving taxpayers' money.
There was a furious reaction today as it emerged chief executive Eric Daniels told employees that Lloyds TSB would continue with its bonus payments, despite the injection of up to £5.5 billion of government funds.
Mr Daniels said the bank faced "very, very few restrictions" on the way it conducts itself even with government nominated directors on the board.
In a recorded message, he added: "If you think about it, the first restriction was not to pay bonuses. I think our staff have done a terrific job this year. There is no reason why we shouldn't."
His words infuriated Eddie Weatherill of the Independent Banking Advisory Service. He said: "It's typical bank arrogance, to be blunt."
"Everybody else in the country is going to pay for the bankers' actions and unfortunately the bankers don't see they are the biggest problem.
"Banks do have to be restricted because this is a gigantic bail-out by anybody's standards and the taxpayers are taking the risk. The banks are avaricious when it comes to money for themselves and the taxpayers' money has to be protected."
Matthew Elliott, head of the TaxPayers' Alliance, said bonuses should be conditional on repaying taxpayer funds at a good rate.
He said: "There will be a huge backlash if ordinary families' money goes towards large bonuses in banks which needed taxpayers' help just to survive."
Gordon Brown said last week a curb on unjustified bonuses would be a condition of receiving money from taxpayers.
Lloyds TSB sees itself in a different situation from the two worst affected banks, Royal Bank of Scotland and HBOS. Lloyds TSB is acquiring crippled HBOS in a rescue takeover that could leave the taxpayer owning 40 per cent of the combined group.
However, Mr Daniels is clearly concerned about the impact on staff morale at one of Britain's stronger banks if bonuses to workers below board level are axed.
Britain's financial services sector received around two thirds of the £26 billion in bonuses handed out to employees last year.
The news comes as a survey of City workers revealed two thirds still expected to get a bonus this year, with many expecting to get even more than last year.
Reader views (11)
Surely they deserve the bonuses 2008 was a great year for the banks!
- W Joseph, London, England
I would support Daniel's move on the basis that many in the bank work for salaries below the national minimum should get their bonus. What I do not agree with is paying the fat bonuses to the trading and investment banking people as well as senior executives who have generally caused the problem. What people seem to forget is bonuses get paid to most employees of the state, particularly at senior level for continuous failure and bonuses do not get cut for such incompetence! People don't seem to complain about this.
- David, West Sussex
This is absolutely disgusting
- Peter, London
The government should ask for the £5.5 billion back and with draw the banks state backed cover unless Daniel is is sacked and bonuses stopped. An example needs to be made and this look the perfect case.
- N Carragher, London , England.
We should of let them go bust! What utter utter contempt they show. But lets be honest none of us are surprised by this news.
- Fly, London
I think Mr Daniels may have just lost his bank my current account, after 45 years.
- Tim Clark, Beaumaris, UK.
Bonuses for employees but no dividends for Shareholders !
Savers get 4% but the Government gets 12% AFTER TAX on Preference Shares PLUS Corporation Tax!
- Tomtom, Leeds, England.
As someone who worked for more than 30 years in public sector jobs where no-one got bonuses, I find it amazing that Lloyds can even contemplate the continuation of this practice in the present situation. OK, if they must, give bonuses to the counter staff in banks. But definitely not to ANYONE higher than that.
- David Blake, London
When many small businesses are dreading the inevitably of making lay-offs of loyal employees, many house-owners are crippled by increasing costs and all taxpayers are facing more of their future income being deducted to pay for the bankers' bail-outs, the payment of bonuses to staffs of failed banks that are surviving only at the public's expense is not just arrogant, but morally corrupt. Eric Daniels should bow his head in shame, apologise unreservedly to all taxpayers and resign instantly. The Government should take measures to add every bail-out penny, paid out in bonuses between now and until the full bail-out cost is repaid, to the Bank's debt to the taxpayer's.
- Mark Hennessy, London
If you were to look at the under lying viability of Lloyds-TSB you will find that they were one of the few banks with very positive balance sheets. These were the result of prudent banking and good management and the employees of the bank made this possible.
Now that they are being asked to take on HBOS and a lot of risk they do need Government capital to ease the transition and re-build that bank's fiscal reputation.
I do not think that bonuses are out-of-order for a past performances and one hopes that the future will also permit more incentives to be paid.
- De Ruyter, St. Albans
Take the government money back and let them go bust; why should taxpayers be expected to fund bonuses in the current climate.
- Casper Slides, Ibiza, Spain
