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Banking: Bonuses

House of Lords written question – answered on 8th June 2011.

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Photo of Lord Myners Lord Myners Labour

To ask Her Majesty's Government whether UK Financial Investments have made representations to Lloyds Banking Group and Royal Bank of Scotland to claw back past bonuses and benefits paid to executive directors in view of the fact that profits were substantially overstated as a result of the mis-selling of payment protection insurance.

Photo of Lord Sassoon Lord Sassoon The Commercial Secretary to the Treasury

The banks, in which the Government are a shareholder, are managed on an arm's-length and commercial basis by UK Financial Investments (UKFI). UKFI engages with the banks, as a shareholder, on their approach to remuneration. Both the Lloyds Banking Group and the Royal Bank of Scotland have awarded deferred share-based bonuses to their executive directors and used stringent deferral and clawback conditions throughout their banks.

Should the remuneration committee of either bank conclude there may be reason to claw back awards, UKFI will work with the company on the outcome of that process as an active and engaged shareholder to ensure that remuneration rewards long-term sustainable performance and does not incentivise excessive risk-taking.

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