It’s hard to argue with the principle of bonus clawbacks, so full marks to Lloyds Banking Group, which as exclusively reported in today’s Daily Telegraph has grasped the nettle and applied it to the 2010 pay packages of a number of senior executives, including the former CEO, Eric Daniels.
Their particular offence was the £3.2bn Lloyds was eventually required to provide for payments protection insurance mis-selling, a loss which coming on top of the disastrous HBOS acquisition and a subsequent state bailout does indeed make you wonder whether any bonuses at all should have been paid in respect of that year.
To act retrospectively is in most instances wrong in principle, but with bankers’ bonuses it is a bit different, as the short term profit generation on which such bonuses are frequently awarded can, as has plainly occurred in this case, turn into catastrophic long term loss. Bankers may think more carefully about the long term consequences of unbridled pursuit of the fee if they see such retrospective action more widely applied. To stand the test of public approval, bonuses have to be earned, not artificially generated.
The announcement came as the country’s Foreign Minister announced that inspectors from the UN’s nuclear watchdog would be barred from nuclear sites during their two day visit.
The IAEA inspectors arrived Monday for two days of talks in the Islamic Republic in an atmosphere of growing tension and concern over a potential conflict.
Their arrival also coincided with increasing speculation that Israel was mulling air strikes on Iran’s nuclear facilities.
“These exercises aim to reinforce the integrated abilities of the country’s anti-air defences,” said a statement from the Katem-ol-Anbia military air base coordinating Iran’s anti-air and ballistic missile systems.
Missiles, anti-aircraft artillery, radars and warplanes were being deployed, it said.
“Exporting crude to British and French companies has been stopped … we will sell our oil to new customers,” spokesman Alireza Nikzad said on Sunday.
Brent crude for April delivery rose as high as $121.15 in early morning trade in London, before easing back to $120.46, up 88 cents on the day.
The European Union in January decided to stop importing crude from Iran from July 1 over its disputed nuclear programme, which the West says is aimed at building bombs.
China rebuked Iran’s move on Monday, and called for “dialogue and negotiation,” to resolve the dispute.
“We have consistently upheld dialogue and negotiation as the way to resolve disputes between countries, and do not approve of exerting pressure or using confrontation to resolve issues,” Chinese Foreign Ministry spokesman Hong Lei told Reuters.
It is the first time a British bank has exercised a “clawback” option on executive pay packages since the financial crisis.
Nadhim Zahawi, a Conservative MP who has campaigned for banking reform, said other bankers should also face clawbacks.
He said: “It should set a precedent for other banks. For too long it has appeared to the public that executive jobs at big banks are a one-way bet, that no matter what you do you get a huge reward.
“That has to change so that negligent behaviour at the top of banks has clear consequences and punishments.”
The decision could pave the way for clawbacks at rival banks. Royal Bank of Scotland, which is 83 per cent owned by the taxpayer, was the second largest player in the PPI market behind Lloyds.