Lloyds Banking Group's former chief executive officer Eric Daniels will lose 25 per cent of his final bonus, as he and four other current and former executives are penalised for improperly sold insurance products, a person with knowledge of the matter said.
Daniels will lose about £360,000 of his £1.45 million (Dh8.42 million) bonus for 2010, said the person, who declined to be identified because the matter is private.
Tim Tookey, Lloyds' finance director, Truett Tate, the head of the wholesale unit, Helen Weir, the former head of the retail bank, and Archie Kane, the bank's ex-group insurance director, will also have some of their 2010 bonus clawed back following the bank's decision to set aside £3.2 billion for the mis-selling of personal loan insurance, said the person.
It's the first time clawbacks have been applied to UK bank board members since the policy was agreed on by Group of 20 leaders in Pittsburgh in September 2009.
Inappropriate sales of payment protection insurance, used to cover payments on credit cards and mortgages in case of illness or unemployment, will push Lloyds into a £2.6-billion net loss for 2011, according to data compiled by Bloomberg.
Daniels stepped down as CEO of Lloyds in February last year and remained on the payroll until September. In 2008, he led the bank's takeover of HBOS, the UK's biggest mortgage lender, whose losses led Lloyds to cede a 41 per cent stake to the government and seek a taxpayer-funded bailout of more than £20 billion.
'No occasion to consult Daniels'
Lloyds chairman Win Bischoff said in June that the lender had had "no occasion" to consult Daniels since he left the CEO's post, even though he remained on the payroll.
Last month, Lloyds CEO Antonio Horta-Osorio said he was turning down his 2011 bonus to reflect the bank's performance and his nine-week absence last year for exhaustion.
A Lloyds spokesman declined to comment on the payments. The Daily Telegraph reported the story earlier. Lloyds is scheduled to report its full-year results on Friday.
Customers who bought PPI rarely compared prices and terms or switched providers and usually weren't aware they could buy it from a firm other than their lender, the UK's Competition Commission has said. The mis-selling of PPI is "likely to lead to a redress" of £9 billion across the industry, Financial Services Authority CEO Hector Sants said in June.