Lloyds Chickens Out on Cutting Bonuses

After all the anger there has been over the huge bonuses bankers get in the last few years, it seemed that some people in the industry were finally starting to listen when Lloyds, one of the banks that was given huge sums by the tax payer to ensure it didn’t collapse, announced it was considering massive reforms to how it paid out its bonuses.

Now, however, the bank appears to have changed its mind, with a spokesman saying “we keep our remuneration plans under review at all times but have no current plans to change our structures and do not expect to do so in the foreseeable future.”

The argument for bonuses that the bank uses are that they are expected within the industry and that Lloyds has to offer competitive bonuses in order to draw in the best talent. However, people point to evidence that the “best talent” often has the same rate of success as an amateur trader but are able to bring in more profits, and losses, due to them having access to larger stacks of cash. There are also numerous scandals and instances of wrongdoing from the last few years caused by people attempting to get bonuses. Rate rigging and PPI mis-selling were both motivated by staff wanting to get their hands on bonuses for increasing profits.

Deborah Hargreaves, the director of the High Pay Centre, a think tank set up to work out how to bring about reform in the highest paying industries in Britain, said “It’s a shame that the first radical thinking to come out of the banks for five years has been rebuffed. We urgently need one of the banks to have the courage to set an example.”

Public opinion is still hugely against the banks, and reforms like this could have gone some way to reassuring people that the businesses weren’t motivated entirely by greed.