Yahoo Finance Lloyds axes bonuses in wake of pandemic hit
Lloyds Banking Group has scrapped bonuses for this year due to the impact of the pandemic on its balance sheet.
Britain's biggest high street lender has put aside billions to cover the cost of loans and mortgages that might not be paid back, slashed jobs and had its profits squeezed by record-low interest rates.
In a memo sent to staff this week, Lloyds said that despite the vaccine rollout business performance remains tough and bonuses must be ruled out, although most staff will get above-inflation pay rises. The move was first reported by the Financial Times.
The bank warned last year that bonuses would be cut if underlying profit fell more than 20pc below target. Lloyds had a £310m bonus pot to distribute last year.
After the Bank of England's warning about cash bonuses last week it was expected that retail banks would hold back on any big rewards to staff.
Sources at Lloyds' rival NatWest said they expect bonuses to be down this year but that decisions have not yet been made. The bank formerly known as Royal Bank of Scotland usually tells staff their bonus figure in February, with only about half eligible for a payout.
In comparison, investment banks are preparing to hand out double-digit bonuses to traders and some key staff following a year of record performance.
Wall Street giants JP Morgan and Goldman Sachs could both end up handing out rewards that are 15pc to 20pc higher than last year, while Barclays is considering a 10pc bump for traders, sources told Bloomberg this week. Final numbers are still being discussed.
However, banking bosses are determined to avoid criticism for profiting from the pandemic, with most chief executives announcing earlier this year that they would not take a bonus for 2020.
A Lloyds spokesman said: "This decision on bonuses in no way reflects the hard work and commitment our people have made throughout this extraordinary year".
Separately, Sir Ian Cheshire will step down on Jan 1 as chairman of Barclays' UK bank after four years.
He blamed the increased time needed to help the bank recover from the Covid crisis for his decision.
Sir Ian will be replaced by Crawford Gillies, the senior independent director on the main Barclays board.
