Lloyds CEO António Horta-Osório is taking a £1.7m bonus for 2013 – his counterparts at RBS and Barclays have waived theirs. 

Lloyds Banking Group has awarded its boss António Horta-Osório a £1.7m bonus after declaring itself “a normal bank” five years after its taxpayer bailout.

With preparations under way for a sell-off of part of the 33% remaining taxpayer 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 helm in March 2011 – defended his decision to accept the bonus which he stressed was linked to the half of the taxpayer stake being sold off or the share price remaining above the taxpayer break-even point of 73.6p. He was handed £2.3m in shares late last year under the terms imposed which linked his payout to the share price, which has outperformed rivals.

A bonus pool of £395m will be shared between 91,000 staff who on average are to receive £4,500, which the bank insisted had been reduced as a result of the bill for compensating customers for mis-selling payment protection insurance 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 – a loss of £802m after tax – after being rocked by a £3bn charge for PPI mis-selling. The bank admitted a week ago that its total bill for PPI mis-selling is now approaching £10bn.Lloyds reported a £606m loss a year ago.

Union officials reacted angrily to the boss’s bonus, when they have been offered a 2% pay rise. Staff numbers have been depleted by more than 35,000 since the 2008 bailout and a cost-cutting programme by Horta-Osório.

“The CEO’s £1.7m bonus, on top of shares worth millions awarded at the end of October, are a kick in the teeth to the taxpayer and to hard-working staff who don’t know if they will be next in line for the chop from one day to the next,” said Unite national officer, Rob Macgregor.

“Profits have doubled thanks to ordinary workers doing extraordinary work behind the scenes to turn the bank around but they have been rewarded with an insulting 2% pay deal – the lowest pay deal of the big four banks so far,” Macgregor said.

The underlying profit was £6.2bn, double a year ago.

Horta-Osório said he was taking his bonus after the share price rose 70% last year compared with a performance of rivals of between a 12% rise and a 14% fall. The price allowed the government to sell off part of its stake in September and there are expectations that a further share sale could begin after the annual report is published on 6 March. “I came to Lloyds three years ago to fix this bank and help taxpayers get their money back,” he said. “We are a normal bank,” he said. His counterparts at Royal Bank of Scotland and Barclays have waived their 2013 bonuses.

The later £1.7m award of shares will only be handed to the Lloyds chief if the targets are met and then he will be required to hold them until 2019.

Horta-Osório has now begun work on a new three strategic plan for the bank, which is being forced to spin off its TSB brand under the terms of its bail out, in a move that could signal branch closures in the future.

A prospectus is already being drawn up as a sales document for prospective buyers of the shares but it is not going to contain any warning about the impact of a potential yes vote to Scottish independence in September. Horta-Osório said: “We will absolutely respect whatever decision the Scottish people will take”. The 18-month period before independence for Scotland in the event of a yes vote would be enough time to make decisions on its impact, he said.

The shares were down 2% at 82p in early trading. The bank had already 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.

Jill Treanor


  • Lloyds CEO Antonio Horta-Osorio