Lloyds Banking Group Director Gives Up £2.25 Million Bonus

Bad news comes day by day to the extent that no one expects any good anymore. Among a plethora of negative records, the latest data on the rise of unemployment in Britain by 146,000 people, totaling 1.97 million, in just two months, from October to December last year, fits perfectly, marking the highest unemployment rate since August 1997.

The overall atmosphere is so poor that it is evidenced by the changed definition of the term good news, which is that the unemployment record still falls short of analysts’ estimates, who expected a round 2 million unemployed in the last three months of last year. Good and bad news are, therefore, increasingly blurred concepts. On the other hand, the number of layoffs in those three months was 259,000, which is, again, the highest amount since data comparisons began in 1995. In January, the number of people applying for unemployment benefits reached a ten-year record of 1.23 million people. Of course, no one thinks this is the end of the story, and further job losses are expected in the coming months. Analysts believe the final figure will be around 3.5 million unemployed by 2010.

Around the same time that the new data was released, Prime Minister Gordon Brown was meeting with some of the largest British employers, trying to persuade them to retain workers or, what falls into the realm of science fiction, to hire new ones. Taking into account the fresh data, he noted that there are still 500,000 open jobs in Britain. However, unemployed Britons can take comfort in the sincere apologies of bank chiefs and the fact that they have lost millions in the crisis, as well as the latest news that Eric Daniels, the director of Lloyds Banking Group, will give up his £2.25 million bonus for this year. His truly generous gesture coincides with a scheduled hearing before the parliamentary finance committee where he, alongside colleagues from other banks, will have to explain his role in this entire unfortunate crisis. Lloyds is 43% owned by the government and received £17 billion for its rescue and the acquisition of HBOS, so they have already had to calm passions in recent days with announcements of giving up bonuses.

Daniels and other directors will receive shares instead of cash in the same equivalent, meaning that the modest gentleman will only retain a base salary of £1 million per year, plus 225% of the possible bonus on that. Although it is expected that other directors will follow his example (though it would not be surprising if they do not even blink), the bank will still be short by several hundred million pounds after paying all its senior staff. It will be more difficult, however, to explain how they are paying hefty bonuses after catastrophic results and, moreover, showing no interest in increasing issued loans even after having already collected £500 million in guarantees and loans from the state.

The Centre for Economics and Business, a British think tank, explains that ordinary mortals do not understand the concept of bonuses in some segments of banking at all, as these are not bonuses in the classical sense, but rather performance-based commissions. Thus, those dizzying figures are not actually something so terrible, but rather something that people earned through hard work. Why then are banks failing and the world is falling into one of the worst crises, and how to justify any hefty payout when unemployment records are being broken, precisely because of those people, the think tank did not elaborate.  (Vanja Figenwald)