No bonuses at Bank of Scotland, Widows amid LBG cuts

Lloyds Banking Group (LBG) — parent of Scottish Widows, Bank of Scotland and Halifax — confirmed on Friday afternoon it has cancelled all staff bonuses for 2020 because of a big drop in profits amid the coronavirus pandemic.

A memo sent to staff said the group would not meet the minimum profit threshold to pay any “group performance share” awards.

The bonus pool was worth £310 million in 2019 and £465 million in 2018.

LBG said on Friday most staff will receive above-inflation pay increases in 2021.

According to Bloomberg, LBG expects to set aside at least £4.5 billion this year for loans likely to fail.

While it swung back to profit in the third quarter, full-year net income is set to be sharply lower at about £1.1 billion, compared to £2.5 billion in 2019, according to data compiled by Bloomberg.

“Despite the good news about the vaccine rollout, like most of our peers our year-to-date business performance continues to be challenging,” the memo read.

“While we have returned to profit, we are not where we expected to be and are short of the commitments we made to ourselves and our shareholders.”

The memo said LBG will consider offering staff “recognition shares” in the company next year.

LBG said: “This decision on bonuses in no way reflects the hard work and commitment our people have made throughout this extraordinary year to keep our businesses operating strongly and to provide support and help to our consumer and business customers.”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.