UKFI challenges Lloyds’ bonus scheme
by Gill Montia
Story link: UKFI challenges Lloyds’ bonus scheme
Lloyds Banking Group has reportedly been told that its plans to pay staff bonuses totalling £120 million need to be reviewed if the bank is to take part in the Government’s recently unveiled Asset Protection Scheme.
Under the scheme, banks with bad debts and toxic assets can clean up their balance sheets by insuring the assets in return for a fee.
Royal Bank of Scotland (RBS) has already announced that it will be offloading £325 billion of assets into the Treasury-backed scheme and Lloyds was expected to reach an agreement over its level of participation by the end of last week.
The group is expected to insure £250 billion of assets for a fee that, reflecting the risk involved, will be significantly above the £6.5 billion paid by RBS.
However, according to a report in the Sunday Telegraph, UK Financial Investments (UKFI), the body set up in November to manage the interests of taxpayers in UK banks, is demanding that Lloyds’ proposed bonus payments are reviewed.
It is understood that UKFI is concerned about the way in which the proposed bonuses are linked to future performance, rather than the size of payments, and that the body also has issues around the bank’s wider remuneration policy.
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