David Prosser: A bonus that should now be repaid

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The Independent Online

Outlook From one bank propped up by the taxpayer to another. What does Eric Daniels, the former chief executive of Lloyds Banking Group, think about the fact the bank slumped to a £3.47bn loss during the first quarter of the year, mostly because of the £3.2bn it set aside to cover the costs of mis-selling payment protection insurance?

We may never know because Mr Daniels left Lloyds at the end of February, stopping on the way out to collect a £1.45m bonus for his performance during 2010. That bonus stuck in the craw for many, but Lloyds was at least able to point to its return to profit last year. Mr Daniels appeared to be leaving with the bank set fair on the road to recovery.

So much for that. Antonio Horta-Osario, the new chief executive, can hardly be held responsible for the fact that Lloyds treated its customers so badly it is now having to find £3.2bn to put matters right – or for, that matter, that its bad debts are rising once again, and not just in Ireland.

While still in charge at Lloyds, Mr Daniels defended the bank's record on PPI. When the British Bankers Association decided to mount a legal challenge to the Financial Services Authority's instructions to the banks about redress for PPI, Mr Daniels, boss of the bank that sold more policies than any other, did not demur.

Today, barely two months after his departure, Lloyds has finally had to concede it was in the wrong on PPI – and the £3.2bn provision is worse than anyone expected.

It is scant consolation that Mr Daniels' bonus was paid in the form of Lloyds shares that cannot be sold for three years. The 8 per cent fall in the bank's share price yesterday means taxpayers will now have to wait even longer to get back the money they have invested in the bank. Victims of the PPI scandal, denied compensation for so long, know a thing or too about waiting too.