Influential MP John Mann has attacked plans to pay Lloyds Banking Group (LBG) chief executive Antonio Horta-Orsorio a £7 million mega bonus.
The bonus award is being made against a background of other major activity for LBG – an application to the Prudential Regulation Authority (PRA) to be allowed to pay shareholders a dividend for the first time since the crash of 2008 and the expected announcement that the bank will have to make another multi-million pound provision for mis-sold PPI.
Mr Mann, a Labour member of the Treasury Select Committee, said: “At a time when Lloyds Bank still have billions to pay out in PPI claims it’s wrong for its chief executive to collect a performance based bonus.
“He and the Chancellor need to be focused on putting the wrongs of the past right, not on when and how much his bonus is going to be.”
The bonus – payable in shares – was awarded to the Lloyds boss in 2011 as a performance related award. It is directly linked to taxpayers getting back the £20 billion used to bail out the bank in 2008.
The government bought a 40% stake in the bank and has since made £7.4 billion in two share sell-offs which have reduced their stake to 25%. The price of shares has also virtually doubled from 34.7p in 2011 to the current 74p.
It is believed LBG has submitted an early draft of its accounts to the PRA, along with a formal request to be allowed to pay dividends. A decision is expected later this week, but shareholders will not find out until the bank’s annual results are published on February 27th.
The PRA is expected to approve the dividend payout as LBG is believed to be about to post an annual profit of £2 billion.
But the same annual figures are expected to announce an extra provision of more than £500 million to pay future successful PPI claims.
An increase in provision of this size will mean LBG has set aside more than £12 billion to pay redress – more than any other UK bank – in what has become one of the biggest financial scandals the UK has ever seen.