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Posts Tagged ‘Lloyds’

Speaking to the BBC after the Royal Bank of Scotland’s chief executive announced his decision to forgo his bonus this year, the government has said that it will not block bonuses to the bank’s other executives.

RBS chief executive Stephen Hester was awarded £963,000 in shares but following pressure from public opinion and MPs he decided to follow the example of Lloyds Banking Group’s chief executive and waive his award.

Lloyds chief António Horta-Osório gave up a bonus which could have been worth £2.4m.

“We are not going to micro-manage bonuses,” a Downing Street spokeswoman said.

Bankers’ bonuses have been coming under increasing scrutiny since the 2007 banking crisis and with most banks expected to record a drop in revenues this year, the bonuses have been perceived as a reward for failure.

Banks’ investment banking operations suffered poor trading last year and multi- billion pound payouts for mis-sold payment protection insurance (PPI) have resulted in lower income which will reduce underlying profits.

Although Downing Street now plans to leave the question of bonuses to RBS’s management, Labour says it will continue to closely monitor the bonuses awarded to senior staff at RBS which is 66 per cent owned by the government.

At a European Parliament hearing in Brussels today, the European Union said it may impose tighter regulations on banks’ bonus payments to staff if they go against “all reason, common sense and morality.”

Michel Barnier, the European Union’s financial-services commissioner, may tighten up laws which govern banks across the EU if excessive bonuses continue to be paid.

One idea under consideration if for the role a bank’s shareholders play in setting pay awards to be strengthened.

Mr Barnier said the European Commission, the executive body of the European Union, will be “extremely vigilant” in monitoring bonuses paid by banks in 2012.

Lloyds Banking Group has decided to withdraw Halifax and Bank of Scotland charity credit cards at the end of February because it doesn’t consider them a cost-effective way of donating to charity.

The bank has been issuing charity credit cards for over 23 years and they have raised millions of pounds for charities such as Cancer Research UK, the NSPCC and the Scottish SPCA.

In 2009 the Cancer Research UK credit card won Best Charity Card Programme at the Card Awards, an achieved that Lloyds’ was proud to mention in its corporate responsibility report.

Although the charities have expressed disappointment at Lloyds’ decision they say that they hope to explore other opportunities with the bank.

Speaking to Radio 4′s Money Box programme, Baroness Finlay, vice chair of the all-party parliamentary group on cancer, said: “The timing of it doesn’t seem very sensitive given there’s all the furore around bonuses.”

Earlier this month Lloyds Banking Group’s chief executive, António Horta-Osório, announced his decision to forgo his bonus, which could have been worth £2.4m.

Stephen Hester, the chief executive of RBS, was awarded a bonus of nearly £1m earlier this week, but after days of pressure from the public and MPs, he decided last night to hand it back.

Cashflows, which provides business to business financial services, has moved quickly to help fill the gap left by Lloyds’ decision to abandon charity credit cards.

The company, which is part of the Voice Commerce Group, has announced the launch of a charity credit card scheme which will run alongside its existing small business payment support activities in the UK.

Cashflows’ CEO and founder, Nick Ogden, said: “Cashflows is at the forefront of innovation in the financial services industry and we are already supporting many UK SMEs.

“Our card issuing services are able to provide support for charities and in the current economic situation it is vital that we try and support them, whilst they face inevitable cuts in donations across the board.”

Consumer group Which? is calling for unfair overdraft charges to be stopped after finding that charges are too complicated and impossible to compare.

Which? asked a number of volunteers to calculate how much an unauthorised overdraft would cost at RBS-NatWest, HSBC/First Direct, Lloyds, Barclays, Halifax, Nationwide and Santander.

The volunteers, who included a maths PHD student, were only able to calculate seven out of 48 charges correctly.

The study found that there is a wide discrepancy between the overdraft charges levied by different banks.

First Direct and HSBC charged the highest unauthorised overdraft fee – at £150 a month, while Barclays would charge just £66.

However all of the charges were so complex that it would be impossible for most people to work out the best deal.

Which? also criticised banks for charging high daily fees which can equate to an APR of over 2,000 per cent.

The consumer group is calling on the Government to give the new financial regulator, the Financial Conduct Authority (FCA), sufficient power to stop banks levying excessive and complex fees.

The FCA, which will take on responsibility for enforcement and conduct from the Financial Services Authority, is expected to have the power to oversee the design of financial products.

Peter Vicary-Smith, Which? chief executive, said: “The regulator must be a strong, open and proactive watchdog that stands up to the banks, not a lapdog”.

In related news, Virgin seems to have backtracked on its plan to charge for all its current accounts.

The move would have meant customers currently using free-if-in-credit accounts having to start paying around £60 a year in fees.

The plan was revealed by Virgin Money’s chief executive Jayne-Anne Gadhia in an interview with the Daily Mail, but Sir Richard Branson, chairman of the Virgin Group, has now commented that it would be “very unwise” to stop offering free current accounts.

Lloyds Banking Group’s CEO in London will not accept an annual bonus for 2011 after taking a leave of absence from the embattled bank, according to a statement released Friday. [via Dealbook]

“As Chief Executive, I believe my bonus entitlement should reflect the performance of the Group but also the tough financial circumstances that many people are facing,” António Horta-Osório said in a statement.

In November, the chief executive was forced to take a break because he was working himself to the point of exhaustion.  He returned to his post earlier this month.

“I also acknowledge that my leave of absence has had an impact both inside and outside the bank including for shareholders. On that basis, I have decided to request that the Board does not consider me for a 2011 bonus.”

The chief executive said he wants to restore the bank’s profitability so the British taxpayers can get back their money.

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The S&P is back in positive territory for the year.  But some sectors did better than others.

The financial sector in particular took a beating and rightfully so.  Banks face increased regulations, the loss of revenue driving fees, and compressed net interest margins thanks to a flattening yield curve, which was the aim of the Fed’s Operation Twist. On top of this, many banks are exposed, directly or indirectly, to risky European sovereign debt.  And worst of all, they face a slowing global economy.

The hardest hit big bank is Lloyd’s Banking Group, which has seen shares decline more than 61% on depressed investment banking revenue amid a weak United Kingdom macro-picture. Bank of America trails only slightly, down 59.5% year-to-date. Reuters recently reported that the bank may have to sell additional assets to buffer itself.

Take a look at how some of the biggest financial institutions in the world stack up:

Here’s a quick rundown of the declines through trading this afternoon:

• Bank of America: -59.45%
• Citi: -43.63%
• Goldman Sachs: -45.89%
• JPMorgan: -21.28%
• Morgan Stanley: -44.22%
• Barclays: -33.31%
• Lloyds: -61.22%
• UBS: -28.42%
• Deutsche Bank: -27.01%
• BNP Paribas: -36.29%
• Société Générale: -58.49%

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