Bank boss may have to pay back big bonus

Eric Daniels, the former CEO of Lloyds, may have to pay back some of the giant bonus he received - unprecedented action for the bank. Photo / Thinkstock

Eric Daniels, who stepped down as the chief executive of Lloyds at the end of February, may have to hand back part of the £1.45m bonus he was awarded for his last year at the helm.

The part-nationalised bank is being forced to take the unprecedented action after it mis-sold payment protection insurance to customers, and so was made to set aside £3.2bn to cover claims to pay them back.

The multi-billion-pound hit pushed the bank into the red for the first three months of this year.

Lloyds confirmed that the bonus awards handed to senior executives are being looked at in light of the PPI charge. This is believed to be the first time that a major UK bank has considered clawing back a bonus awarded to a board-level executive.

Lord Oakeshott of Seagrove Bay, the former Treasury spokesman for the Liberal Democrats, welcomed the move, saying: "It's better late than never, but why was he paid a bonus at all?"

On Thursday, the Bank of England's Governor, Sir Mervyn King, advised banks to cut bonus payments this year and use the money to protect themselves from the eurozone debt crisis.

Lloyds said its remuneration committee would make a decision in keeping with the Financial Services Authority code on compensation. "The implications on compensation are being considered by the Remuneration Committee and will be determined by the board in due course," a spokeswoman said.

The 2010 bonuses are deferred in the form of shares that are not handed out until at least March 2013.

- Independent