LLOYDS TSB 2

Lloyds is to water down pension benefits for 56,000 of its staff, while handing out huge bonuses to senior managers who have masterminded a job cuts programme. The bank, 43% of which is owned by the taxpayer, has announced plans to cap the rate at which employees in its final-salary pension scheme clock up retirement benefits. But at the same time, it is planning to pay an “integration award” to executives if they handle the bedding down of rival HBOS well. The award will be for performance in 2009 and could be as much as 80 per cent of basic salary. That would equate to £2.4 million for Lloyds board members, including £828,000 for the bank’s chief executive, Eric Daniels.

The bonus may be paid to all senior managers at Lloyds, perhaps numbering 200 out of its British workforce of 120,000. It will provoke fresh anger among unions as the bank has sacked more than 11,000 staff since taking over HBOS in January. Investors in Lloyds were also furious at the deal, which saw Britain’s only leading profitable bank tie itself to HBOS, which was on the verge of collapse in autumn 2008. Many shareholders feel Lloyds did not adequately disclose the dire state HBOS was in as a result of heavy exposure to the property sector, subsequently leading to billions of pounds of losses.

Lloyds has said that it will take three years to integrate HBOS. The bonus will be deferred until the project is complete. The payout will depend on whether managers hit the target of creating £1.5 billion in synergies from the deal as well as other measures, including how customers are treated. A spokesman for Lloyds said, “We believe very firmly this is in the interests of shareholders, who we consulted extensively at the time.” Lloyds disclosed the integration award in its annual report this year. It will be paid as part of the bank’s long-term incentive package, which in total could rise to 200% of salary.

The long-term plan did not pay out in 2008 as the bank failed to meet targets but the lender did make awards worth 375% of salary for that year, which will be paid out in 2010. Mr Daniels and other directors did not receive an increase in base salary in 2008 and the group also waived their 2008 cash bonuses. UK Financial Investments, the Government body in charge of supervising the taxpayer-owned stakes in banks, was informed of the awards. It is understood to support them because the integration of HBOS is the bank’s most important task over the next few years.

Lloyds said that while existing pension promises at Lloyds will be honoured, the growth in future benefits will be capped at 2% or the inflation rate, whichever is lower. The effect will be to dramatically reduce pensions for younger employees and those with their big promotions still ahead of them. People close to retirement or on a plateau in their careers will be less affected. However, many of the 54,000 Lloyds employees in less generous defined contribution pension schemes will benefit as Lloyds replaces them all with a new scheme. (Source: Times Online, Dec/09)

Lloyds TSB could face a legal challenge over the transfer of sensitive personal information to processing centres in India without a customer's consent. The bank's trade union is examining whether to mount a civil court challenge to the practice and a customer is also considering similar action. Law firm Bindmans, which is handling both cases, argues that laws governing data protection in India are not as stringent as those required in the UK. Under European law, sensitive personal data can only be transferred outside the European Economic Area with the express consent of a customer.

Lloyds TSB union claims that the action is an "important case" which could force the bank to drop its offshoring policy. So far, it has referred its concerns to the Information Commissioner to discover whether Lloyds is living up to its Data Protection Act duties. "If successful, this case could force Lloyds TSB to obtain the written consent of customers before transferring their sensitive personal information abroad," the union said. "Since there is a considerable body of research indicating just how unpopular offshoring is amongst customers, this could force Lloyds TSB into rethinking its whole 'Jobs to India' strategy."

However, Lloyds denied it had breached any EU or UK laws. "Security is of the utmost importance to us," it said. "We are confident that we comply with the Data Protection Act and our customers can be reassured that their personal information is as protected in India as it would be in the UK." Lloyds aims to have 1,500 workers in India by the end of the year. In India, UK banks can cut costs by paying graduates as little as $200 a month to work in administration and answer customer calls. (Source: BBC News)

A disgruntled bank customer changed his account password to "Lloyds is Pants", only for staff to switch it to "No We Are Not". Steve Jetley, of Shrewsbury, used "Lloyds is Pants" for phone and online banking for two years. He came up with the password after blaming Lloyds over a holiday insurance muddle which left him with a £1,200 bill after a skiing accident. But Mr Jetley was angry when he called the Lloyds TSB business centre in Birmingham and discovered it had been changed. He demanded it be re-set to "Lloyds is Rubbish". When told that was inappropriate, he tried "Barclays is Better".

When that was knocked back, he went for "Censorship" but was told it could only be six letters. When he finally suggested "Faeces" he was informed new rules meant the characters had to be numbers, not letters. Lloyds has now confirmed a staff member broke banking rules by changing a customer's password without consent. A spokesman said, "We apologise to Mr Jetley." Mr Jetley said, "I haven't registered a new password yet, I'm still trying to think of one I can get past the censors." (Source: Ananova, Aug/08)

<<< Prev