Financial News

  • 15 April 2013, 10:11

HBOS: Bosses Get Bonuses 'For Going Bust'

Pressure is mounting on disgraced former HBOS bosses amid anger over mammoth pension pots and nearly 1m of "bonuses for going bust".

Seven directors of HBOS landed 914,000 in "change of control" payments triggered by the bank's rescue takeover by Lloyds Banking Group, following its 20.5bn taxpayer bailout in 2008.

It also emerged that Sir James Crosby and Andy Hornby - two of the three former HBOS chiefs damned last week by a parliamentary commission for "catastrophic failures of management" - were on pension schemes that accrued benefits at twice the rate of average workers.

Mr Hornby, eligible to start drawing down a 240,000-a-year HBOS pension when he turns 50 in four years' time, is now in the spotlight following Sir James's decision earlier this week to hand back 30% of his 580,000-a-year pension.

Under the change of control payments handed out at the time of the Lloyds takeover, Mr Hornby received 251,000 cash and 7,599 shares - on top of salary, pensions awards and redundancy payments.

MPs are now demanding an inquiry into the handouts.

John Mann, MP and member of the Treasury Select Committee, said the due diligence done at the time of the deal needed to be investigated, while the former bosses should also pay the money back.

He told the Guardian: "This is taxpayers' money being used to pay bonuses to bankers that brought down their own bank and cost thousands of ordinary workers their jobs - These are bonuses for going bust."

Others to receive the payments include Peter Cummings - the former head of corporate lending and the only ex-HBOS director penalised by the Financial Services Authority (FSA) after being fined 500,000 and banned for life from working in the City. He received 129,000 and 2,051 shares.

Lloyds said the decisions to award change-of-control payments and pensions were made by HBOS before its takeover.

A spokesman said: "At the time these arrangements were settled, Lloyds did not own HBOS.

"All decisions with respect to the redundancy or severance terms applicable to departing HBOS senior executives, including pensions, were made by the HBOS remuneration committee or board of HBOS prior to the acquisition by Lloyds."

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