News Column

Lloyds: Time banks cleaned up their act

February 3, 2014

By Peter Campbell, Daily Mail, London

Feb. 03 --The boss of Lloyds Bank is to call for the industry to adopt 'the highest standards of responsible behaviour' just hours after it emerged RBS is considering Goldman Sachs -style pay deals to get around the EU bonus cap. Ant"nio Horta-Os"rio, chief executive of Lloyds, will say that the damage to the industry's reputation in the wake of the financial crisis has been 'immense'. In a speech tomorrow he will warn the sector it must 'rebuild a sound reputation' in order to 'change public perception and regain trust'. He will also promise a package of measures from Lloyds, including boosting small business lending by pounds sterling 1bn and making sure that 40pc of senior roles are filled by women by 2020. But his plea comes as it emerged that RBS is planning to side-step new EU payout rules. The bonus cap, which was brought in to discourage the casino-style behaviour that led to the financial crisis, states that bonuses cannot exceed basic salary. This can rise to double basic pay, but only if shareholders vote for the move. But some lenders including Barclays , HSBC and Goldman Sachs are said to have found ways around the rules, which came into force on January 1 . By awarding staff 'allowances' it can boost their basic pay and therefore raise the amount they are allowed to receive in bonuses. Now RBS is considering this option, it was reported. RBS said it was 'in discussion with shareholders' and refused to comment further. Its annual pool of bonuses for last year is already expected to be pounds sterling 500m which is down from pounds sterling 800m the year before. Separately, the bank's chief executive Ross McEwan could be pulled in front of the Bank of England after taking a host of writedowns last week. The Prudential Regulation Authority is set to meet with McEwan over the group's safety buffer of cash, it was reported. It is feared that its pounds sterling 3bn provision for fines and compensation and pounds sterling 4.5bn writedown from its 'bad bank' arm will have sapped the group's resources, taking the amount of cash it holds in reserve below the new levels required to pass EU 'stress tests'. The bank is now expected to make an annual loss of pounds sterling 8bn setting back the prospects of returning taxpayer-owned shares to the public markets. But Lloyds, also backed by the public purse, is looking to pay out its first dividend since it was bailed out. The bank is seeking permission to pay out a pounds sterling 350m dividend, analysts have said. The payout the first since October 2008 would show that the bank is nearing the stage where the Government's 33pc stake could be sold off. (c) Daily Mail ___ (c)2014 Daily Mail (London, ) Visit the Daily Mail (London, ) at Distributed by MCT Information Services

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Source: Daily Mail (London, England)

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