Lloyds Boosts Banker Bonus Pool by 10% as Profits Double

Lloyds Banking Group has boosted its annual banker bonus pool by 10% to £395m after the financial more than doubled its underlying profit to £6.2bn.

According to Lloyds' full year financial results, the group's chief executive Antonio Horta-Osorio will receive a £1.7m (€2.1m, $2.8m) bonus award in deferred shares for five years, which is also subject to conditions.

His contract entitles him to a maximum annual award of 225% of his £1.061m basic salary.

Lloyds is 33% owned by the government and its largest investor is the UKFI. It has to get permission from the government before it can start paying shareholders a dividend. The last time Lloyds paid a dividend was in 2008.

This week IBTimes UK reported that Lloyds sealed a deal with UKFI to boost bonuses, dividends and payouts to its bosses.

In its full year results, Lloyds also revealed that it is to move to a dividend payout ratio of at least 50% of sustainable earnings in the medium term.

The news of a rise in bonuses for staff and Horta-Osorio will be difficult to bear for some customers, as the group is still tackling a raft of mis-selling scandals.

Horta-Osorio recently tried to quell concerns over payment protection insurance (PPI) claims after the bank set aside another £1.8bn to compensate customers who were mis-sold the product.

While banks have so far set aside just over £20bn to deal with the most expensive consumer scandal in British history, Lloyds' total PPI bill now stands at £9.8bn – nearly half of the entire industry's compensation pot.

PPI was originally designed to provide loan repayment cover, should the customer fall ill, lose their job or have an accident.

However, millions of customers complained after saying that they never wanted or needed the policy in the first place.

It is also facing millions or billions of pounds in extra redress payments to victims of mis-sold interest rate hedging products.