Lloyds bonus, govt rhetoric stoke bank bonus row

Britain's bank bonuses row flared into life on Wednesday as a report the boss of bailed-out British bank Lloyds will take a 2 mln pound bonus clashed with a new government pledge to curb payouts. The Conservative-Liberal Democrat coalition government is struggling to clamp down on banker pay and quell public anger over perceived excesses in a sector that needed significant state support during the credit crunch.
"What we all want to see is the banks paying more in tax, and we will see that. We want to see the banks doing more lending, and we will see that. We want to see bonuses cut, and we will see that," Prime Minister David Cameron said.
However, he admitted his government could do little to dictate bonus pay at majority state-owned bank RBS.
The contract negotiated between RBS and the previous Labour government allows for bonuses at market rates this year.
A report from the BBC saying Eric Daniels, who steps down as Lloyds chief executive in March, is set to take a bonus is a further blow for the coalition's efforts.
Daniels receives 1.035 mln pounds in base salary. He can receive up to 225% of his base salary in annual bonus — potentially taking his annual pay to 3.4 mln pounds — plus awards under a long-term share scheme.
The BBC, citing people close to the bank, said he will be awarded close to 2 mln pounds by the board and get long-term share awards worth more than 2 mln pounds more.
Lloyds, which is 41% owned by the UK government, declined to comment. The bank reports 2010 results on February 25.
A source close to the bank said no decision had yet been made on Daniels' bonus.
The American banker has waived his bonus for the last two years, but the BBC said it was inconceivable he will turn it down this year, citing the people close to the bank.
The row over pay has flared up in the last week after a report that Stephen Hester, CEO of RBS, was set for a 2.5 mln pounds bonus.
And Barclays CEO Bob Diamond said on Tuesday it was time for the banks to stop saying sorry for their part in triggering the financial crisis.
The government is attempting to get banks to agree to boost lending to small business as part of its talks over restraining pay, under discussions dubbed "Project Merlin".
Finance minister George Osborne has said all options were on the table if those efforts failed, although a return of last year's one-off bank bonus tax is seen as unlikely.
Spain's Santander, one of the biggest UK mortgage lenders, said it may not participate in the collective plan, signalling a deal is far from being agreed.