Lloyds Banking Group has posted a £3.5bn loss in 2011 after placing £3.2bn aside to cover missold payment protection insurance.
The loss compares to a £281m profit made by the bank in 2010.
Lloyds, which is 41 per cent owned by the taxpayer, also announced that its bonus pool for 2011 had fallen 30 per cent to £375m. The average bonus for its 100,000 staff will be £3,900.
Lloyds says that were it not for the PPI payment and other redress costs, the bank would have made a £2.7bn profit in 2011. Other redress costs included a £1.45bn cost for simplifcation, integration and EC mandated retail business disposal; £838m for volatility arising in the insurance business and a £175m provision with regards to German business insurance litigation.
The bank said it is “in a significantly stronger position than it was 12 months ago” as it improved its capital position and increased deposits by 6 per cent to £406bn.
Lloyds Banking Group chief executive Antonio Horta Osorio says: “’In 2011, we established our longer term strategy for the group, acted quickly and decisively to mitigate the effects of a challenging environment and put in place the right foundations to deliver on our objectives over the next three to five years, whilst continuing to support the UK economy.
Yesterday, Money Marketing revealed Lloyds’ plans to bolster its direct advice arm in the run-up to RDR, including splitting its advisers into two groups.
It says: “Inevitably, as a result of RDR, some IFAs will choose to exit markets and therefore some customers will no longer receive advice from their IFAs. The business is committed to providing a direct proposition to maintain a high quality of service to these customers.”