Lloyds Banking Group defends bonus payments

by Gill Montia

Story link: Lloyds Banking Group defends bonus payments

Lloyds Banking Group is defending plans to pay staff bonuses this year, alongside an announcement that it expects its HBOS business to post a larger than expected loss of over £10 billion, for 2008.

The bank is 43% state-owned and the losses at HBOS could mean that further government money will be needed to prop up the hastily created group.

According to a report in the Sunday Telegraph, the total to be shared between workers who have performed well is £120 million.

Lloyds has not confirmed the amount but a spokesman has explained that many branch workers “earn just £17,000 a year and will get a bonus of less than £1,000″.

However, any agreement over bonuses will receive input from UK Financial Investments.

The body was set up in November, to manage taxpayers’ interests in banks in which the Government holds a stake.

In addition, Treasury Secretary Yvette Cooper indicated earlier this month that failing banks that continue to pay bonuses could be excluded from the Government’s proposed asset protection scheme.

The scheme under development could mean the taxpayer will end up underwriting hundreds of billions of pounds of banks’ bad loans.

Meanwhile, speculation that Lloyds Banking Group may have to be nationalised continues.

Ministers have refused to rule out the possibility, although Chancellor of the Exchequer Alistair Darling has reiterated that it is best for banks to remain in the private sector.