Lloyds chief's bonus 'may be held'

Antonio Horta-OsorioThe boss of taxpayer-backed Lloyds Banking Group could reportedly see his controversial bonus haul held back until the Government breaks even on its stake in the lender.

Chief executive Antonio Horta-Osorio is said to be in line for as much as £4.4 million, but is expected to be told he can only cash in bonuses once the share price holds firm above 74p - the average price paid by the State under the bank's mammoth 2008 bailout - according to The Sunday Times.

Lloyds is understood to want to defuse a looming row over plans to hand Mr Horta-Osorio the multi-million pound bonus while also rewarding the Portuguese banker for efforts in turning around the bank after he last year waived his bonus following a prolonged period of sick leave.

Bosses for Barclays and Royal Bank of Scotland have already said they will forego bonuses for 2012 after a dire year for both banks, which were embroiled in hefty Libor rate-rigging settlements and mis-selling scandals.

Lloyds has escaped much of the recent wrath aimed at banks but it has been heavily involved in the mis-selling of payment protection insurance (PPI) and despite a doubling of its share price last year, at just under 55p, taxpayers are still sitting on a large paper loss.

The bank is expected to make a full-year loss of around £1.4 billion when it reports on March 1 as it continues to suffer from bad debts from corporate loans and a big bill over PPI compensation and provisions for mis-selling of interest rate swaps to small businesses.

Lloyds is likely to face public and political backlash unless it makes moves to offer concessions on Mr Horta-Osorio's bonus - thought to include an annual award worth up to £2.25 million, with more from a long-term incentive plan paying out in three years.

The bank has already frozen basic pay for 500 senior staff for the third year in a row and is also now said to be considering clawing back bonuses from past and present management to cover PPI and interest rate swap provisions.

The 40% state-owned lender was pushed to a £144 million loss in the three months to September 30, as it took an additional £1 billion charge for dealing with the PPI scandal, taking its total to £5.3 billion.

But stripping out the cost of PPI, the group doubled its underlying profit to a better-than-expected £840 million in the third quarter as its slashed bad debts and narrowed losses from its non-core businesses.