Lloyds Bonuses Said to Beat RBS’s for First Time Since Bailoutsby
Bank has earmarked $486.8 million for employees’ variable pay
RBS CEO says lender will keep ‘downward trajectory’ on awards
Lloyds Banking Group Plc is poised to pay more in bonuses than Royal Bank of Scotland Group Plc for the first time since the financial crisis, underscoring the contrasting performances of two of Britain’s bailed out banks.
Lloyds has earmarked about 390 million pounds ($486.8 million) for its employee bonus pot, overtaking RBS, which is considering a pool worth about 340 million pounds, according to people familiar with the matter. The lenders plans are yet to be finalised, said the people, who asked not to be named because the details haven’t been made public yet.
While Lloyds Chief Executive Officer Antonio Horta-Osorio is paying dividends after returning Britain’s largest mortgage lender to profitability and helping the government cut its stake below 5 percent, RBS remains mired in legacy misconduct issues and may languish in state ownership for at least the next five years.
Lloyds probably will boost its bonus pool from the 353.7 million pounds it paid out in 2015 after taking fewer charges for wrongly sold payment protection insurance last year than in previous periods, according to a person with knowledge of the matter. The London-based lender took about 1 billion pounds of charges for PPI in 2016 compared with 4 billion pounds in 2015, a year when it was also fined 117 million pounds by the U.K.’s Financial Conduct Authority for its handling of consumer complaints.
RBS CEO Ross McEwan said last month the bonus pool would shrink from the 373 million pounds paid for employee performance in 2015. The Edinburgh-based lender set aside $3.8 billion on Jan. 26 to cover a potential settlement with the U.S. Department of Justice over its investigation into the sale of mortgage-backed securities ahead of the financial crisis.
RBS has trimmed the investment bank bonus pool by more than 90 percent since 2010, McEwan said on a call with reporters. “That downward trajectory will continue when we announce pay decisions later this year,” he added.