Lloyds Banking Group is considering clawing back a portion of the bonuses paid out to senior executives because of the losses it will incur due to PPI misselling.
In remarks made at its annual shareholder meeting in Glasgow yesterday, chairman Sir Win Bischoff, said the bank was assessing whether the £3.2bn losses incurred by the misselling of PPI should affect the pay of senior staff.
Bischoff said the bank’s decision to start refunding customers was “in the best interests of the long-term stability of the business”.
He added: “The implications for compensation are being considered by the remuneration committee and will be determined by the Board in due course.”
Senior executives including Eric Daniels, the former chief executive, Helen Weir, former head of retail, and Tim Tookey, finance director, could be among those potentially affected, the Financial Times reports.
No British bank is believed to have reclaimed bonuses since new “clawback” rules were introduced by the FSA last year. These rules stipulate that deferred awards should be reduced if the business suffers a material downturn in performance or fails to manage risk.
Lloyds announced earlier this month it had set aside £3.2 billion to cover the cost of PPI mis-selling compensation. After the British Bankers’ Association lost its High Court challenge to FSA guidelines on compensation, Lloyds said it would not back an appeal against the ruling.
The BBA later conceded defeat and announced it would not appeal.