As a result of the £226m penalties for manipulating the benchmark interest rate, Lloyds also indicated that its entire bonus pool could be cut to reflect the cost incurred by the bank, which is 24% taxpayer-owned.
Lord Blackwell, the new chairman of Lloyds, said: “The board has been clear that it views the actions of those responsible for the misconduct … as being completely unacceptable.”
Lloyds was the seventh bank to be fined for rigging Libor but the first to be punished for depriving the Bank of England of fees it should have received for providing the bank with emergency financing during the financial crisis.
While eight Lloyds staff have been dismissed and lost their bonuses, four more were cleared and allowed back to work. It is unclear what has happened to the bonuses of the 10 who had already left, as Lloyds has no power to claw back the cash. The details of those 10 have been passed to the City regulator, the Financial Conduct Authority.
Among those fired were three of the four unnamed individuals who may have been involved in depriving the central bank of emergency funding fees of almost £8m.
Blackwell appeared to indicate that further cuts could be made to bonuses, saying: “The remuneration committee is tasked with ensuring that the outcome of the disciplinary process and the significant reputational damage and financial cost to the group are fully and fairly reflected in the options considered in relation to other staff bonus payments.”
António Horta-Osório, the Lloyds boss who joined after the offences – which covered 2006 and 2009 – took place, said he was determined the bank should have high levels of integrity.
“Having now taken disciplinary action against those individuals responsible for the totally unacceptable behaviour identified by the regulators’ investigations, the board and the group’s management team are committed to preventing this type of behaviour happening again,” he said.
When the bank was fined, regulators published a string of embarrassing emails and electronic chats, including one remark from a Lloyds employee, when asked about reducing a Libor rate: “Every little helps … It’s like Tescos.” The trader replied, picking up on the marketing of the supermarket chain: “Absolutely every little helps.”
The fine was imposed by the FCA as well the US department of justice and the US regulator, the Commodities Futures Trading Commission. Mark Carney, governor of the Bank of England, issued a furious response because of the steps taken by traders to reduce the fees that Lloyds, which also owns Bank of Scotland and Halifax, paid for emergency funding.
“Such manipulation is highly reprehensible, clearly unlawful and may amount to criminal conduct on the part of the individuals involved,” Carney said at the time. The Serious Fraud Office is investigating a number of firms for rigging interest rates.
The £226m penalty imposed in July, includes £7.8m in compensation to Threadneedle Street.
This is the second issue for which Lloyds has taken high-profile action to claw back or withdraw bonuses from staff. In February 2012, it became the first bank to publicly hold back pay from senior staff – including its former boss Eric Daniels – for losses incurred from payment protection insurance misselling.
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