The boss of Lloyds Banking Group, Antonio Horta-Osorio, is being given a £1.5 million bonus despite the taxpayer-backed bank racking up losses of £570 million.
The news comes a day after Royal Bank of Scotland said it will pay bonuses totalling £607 million after making a loss of £5.2 billion in 2012.
Lloyds today said it will pay bonuses of £365 million across the group which is reduction of just 3% on the total paid in 2011.
Mr Horta-Osorio’s bonus comes as the bank said that it has been forced to set aside another £1.5 billion in the last three months of 2012 to cover mis-selling of payment protection insurance. That takes the total which Lloyds has lost on mis-selling PPI in the last two years to £6.8 billion - by far the largest sum among the UK’s high street banks.
Lloyds chairman Sir Win Bischoff said: “Whilst Lloyds Banking Group continues to show restraint in its annual bonus awards, we believe our employees should be rewarded for their contribution to the further strengthening of the business in 2012.
“António has led the group through a strong year that has put us ahead in the implementation of our strategic plan. I believe this, in part, is a reason for the Group being the best performing stock in the FTSE 100 in 2012.”
Lloyds loss of £570 million was considerably less than the £3.5 billion it lost in 2011.
Mr Horta-Osorio’s bonus will be deferred for five years and will paid in shares not cash. It is also dependent either on the Government having sold a third of its 39% stake in Lloyds at a price of at least 61p a share which is what the taxpayer paid in the £20 billion bail-out of the bank in 2009 or the share price hitting 73.6p. Lloyds shares today fell more than 3 per cent to 52.4p. The Treasury is currently nursing a £2.2 billion on its shareholding.
Mr Horta-Osorio, who took two months away from work after suffering extreme fatigue two years ago, said that he had asked that his bonus be made conditional on the share price hitting the value which the taxpayer had paid.
He said: “When I came to Lloyds my main objective was to get the taxpayers’ money back. I am very confident that we are going to do that.”
Lloyds said that given the tough conditions set for Mr Horta-Osorio’s bonus it expected the likely value of it when it is awarded in 2018 would be around £750,000.
Stephen Hester, chief executive of RBS, said yesterday that he believed that the Government could start to sell shares in his bank which is 81% owned by the taxpayer within two years.