Lloyds will replace across-the-board rises with individual increases based on staff performance and bank profitability.
The bank's move raises the spectre of further industrial action in the banking sector. TSB staff held a one-day strike on 8 January over job cuts and Bifu, the Banking, Insurance and Finance Union, is consulting its 22,000 members in NatWest over the pay freeze announced last week.
Union leaders yesterday branded the Lloyds permanent freeze on basic pay 'absurd'.
Leif Mills, of Bifu, said last night: 'Lloyds staff we have spoken to are absolutely horrifed. This is worse than Victorian - it's positively medieval. People in banks now have frozen pay and total job insecurity.'
With the NatWest pay freeze and the Government's own 1.5 per cent limit for the public sector, Mr Mills called Lloyds' move 'the brazen face of an incomes policy'.
According to Income Data Services, 19 per cent of UK manufacturers imposed pay freezes for the year starting last August. Lloyds has gone further than other banks and many manufacturing employers by ruling out across-the-board increases in future years.
Brian Pitman, Lloyds' chief executive, wrote to all 40,000 UK staff this week saying that blanket increases had been 'designed to operate in an inflationary environment' that no longer applied.
Staff would now receive pay rises based on their own personal performance, that of their particular division and the bank itself.
Lloyds is introducing these once-a-year rises 'to remain competitive and motivate people', a spokeswoman said.
She added: 'We have wanted to move on to more performance-related pay for a long time. This is the year we are going to do it.'
Incentive bonuses would make up 5 per cent of Lloyds' salary bill for 1993, she said. 'The majority of staff will get performance-related increases. Some won't'
Barclays Bank is meeting with Bifu negotiators today to discuss pay for 1993.
Midland, now owned by HSBC, does not decide on pay until June, while Royal Bank of Scotland and Bank of Scotland hold their pay negotiations in April and May.
TSB is meeting Bifu negotiators at the conciliation service Acas today in an effort to head off a repeat of the 8 January strike scheduled for this Friday. Bifu is fighting 1,000 job cuts planned by TSB on top of 5,000 already lost through restructuring.Reuse content