Lloyds to claw back bonuses on soaring PPI mis-selling claims

 
Tim Wallace
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DIRECTORS at Lloyds are set to cut bonuses from 2010 on the back of ever-rising PPI compensation claims when the remuneration committee meets later this week.

The group of senior staff and non-executives is also likely to award chief executive Antonio Horta-Osorio a £1.4m bonus for 2010 on the back of a rising share price and progress in reforming the bailed-out bank.

The bank can claw back bonuses previously given, as the payments are not all made up front but are spread out over several years.

The clawback mechanism means a crisis like the payment protection insurance (PPI) scandal can be taken into account, cutting prior payouts as the full implication of past actions becomes apparent.

Lloyds has so far set aside £5.275bn to cover compensation claims for PPI, a far higher level than was expected in 2010.

Horta-Osorio is expected to be rewarded as the state-backed bank’s share price has more than doubled since May 2012, and the lender is making headway with its plan to sell off 632 branches to the Cooperative Bank. Lloyds will report full-year results on Friday.