Ex-Lloyds boss Daniels 'should pay for PPI pain'
Lloyds Banking Group is under mounting pressure from major shareholders to make its former boss shoulder some of the burden of the bank's colossal payment protection insurance losses.
Clawback: Some investors want the bank to cancel future bonus payments to Eric Daniels
A group of powerful investment firms wants Lloyds to cancel future bonus payments for Eric Daniels, who stepped down in February just weeks before the bank took an eye-watering PPI hit.
Lloyds set aside £3.2bn to compensate victims of the loan protection racket - equivalent to 145% of the bailed-out bank's entire 2010 pre-tax profit.
Sources told the Mail that major institutional investors - thought to include Standard Life - are pressing for Daniels to share some of the financial pain himself.
They have privately asked Lloyds chairman Win Bischoff to consider invoking new provisions to reclaim bonuses that subsequently turn out to be unmerited.
The erstwhile chief executive received a bonus of £1.45m for his efforts last year, with the payments set to be deferred over the coming two years.
According to the bank's annual report, Lloyds has the power to recoup unwarranted bonuses and cancel future payouts if profits turn out to be illusory.
All Lloyds' senior executive have so-called 'malus' clauses written into their pay deals. This gives Lloyds the right to claw back any payments made on the basis of 'unsustainable performance', the report reveals.
At yesterday's annual general meeting, Bischoff said: 'The implications on compensation are being considered by the remuneration committee and will be determined by the board in due course.'
Bischoff, a former boss of bailed-out US bank Citigroup, said he was talking to the Financial Services Authority about the possibility of clawing back PPI-related bonuses.
In addition to the PPI debacle, major shareholders are understood to have argued that Daniels should pay the price for Lloyds' multiplying losses in the Irish Republic.
The bank took a £4.2bn hit to cover soured loans in debt-crippled Ireland last year. But since Daniels' departure a further £1.1bn in bad Irish debt has come to light. This, coupled with the PPI provision, pushed Lloyds into a £3.5bn loss between January and March.
Much of the bank's woes across the Irish Sea stem from Daniels' decision to rescue HBOS as it floundered at the height of the financial crisis in 2008.
The deal swiftly turned sour and the enlarged bank had to be rescued from oblivion with more than £20bn of taxpayer cash. The taxpayer is still sitting on a paper loss of more than £5bn.
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