THE Chief Executive of Lloyds Banking Group, Eric Daniels, is set to receive a £3m pension as the Government is forced to take a majority stake in the 244-year-old bank.
Mr Daniels, 58, stands to draw retirement payments of £150,000 a year when he reaches 60.
He helped orchestrate the Government-backed rescue of HBOS which was overloaded with toxic assets in the form of bad debts.
The merger of Lloyds TSB with the stricken HBOS to form the Lloyds Banking Group was proposed to shore up the ailing giant, which operated Halifax and the Bank of Scotland.
Instead the weight of HBOS’s bad debts dragged down the newly formed Lloyds Banking Group necessitating the Government to step in and take a majority stake.
Under the agreement, the Government’s stake in the bank is expected to leap from 43 per cent to about 60 per cent.
This could potentially rise to 75 per cent further down the line, according to reports last night.
Taxpayers now look destined to end up covering the reported £3 million pension pot of the bank's American boss.
Mr Daniels has been able to build up his huge pension after working at the bank for eight years. He joined in 2001.
Lloyds Banking Group shares rallied slightly following news of the Government bail-out but it could prompt Mr Daniel’s early exit.
The former chief executive of HBOS, Andy Hornby, stepped down from his post in the new year after it was taken over by Lloyds TSB.
Sir Fred Goodwin – blamed for crippling the Royal Bank of Scotland (RBS) after aggressively entering the mortgage markets – agreed to take early retirement in October 2008 after the Government was forced to effectively nationalise RBS.
The 50-year-old received a £703,000 a year deal and is under immense pressure to return the cash.
So far Sir Fred has resisted any pressure for him to give back his pension despite it being seen a ‘reward for failure’.
Last month Mr Daniels prompted widespread anger when he told MPs his salary of £960,000 a year was 'relatively modest’.
Today he welcomed the Government’s intervention.
He said: “Participating in the Government’s Asset Protection Scheme substantially reduces the risk profile of the Group’s balance sheet.
“Our significantly enhanced capital position will ensure that the Group can weather the severest of economic downturns and emerge strongly when the economy recovers.
“We believe that this is an appropriate deal for our shareholders.”
Nearly 83 per cent of the “toxic” assets placed in the Government insurance scheme come from HBOS’s books, compared with just 17% from the former Lloyds TSB’s.
Source:the times
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