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Lloyds announces £3.5bn loss

PPI scandal hits part-nationalised bank's profits

Lloyds Banking Group

Lloyds is clawing back bonuses worth a reported £2m from its senior employees

Lloyds Banking Group has announced losses of £3.5bn in 2011, mainly as a result of having to pay over £3bn in compensation to customers who were mis-sold payment protection insurance (PPI).

Earlier this week, the part-nationalised bank stated that it would claw back £2m in bonuses from senior employees who presided over the PPI scandal. This was after Which? wrote to the major UK banks asking them to withhold bonuses from its executives over PPI.

Lloyds reported that its bonus pool had reduced by 30% compared with 2010, and that the average bonus for its staff will be £3,900.

PPI compensation hits profits

In May 2011, Lloyds put aside £3.2bn in order to pay compensation for customers potentially mis-sold PPI. The bank announced today that without this it would have made a £2.7bn profit.

In order to cut costs, Lloyds has cut 15,000 jobs and will be disposing of over 600 branches. It will also halve the number of countries in which it carries out business by 2014.

Lloyds reduces complaints

One silver lining for the bank was a 24% drop in complaints in 2011. Complaints fell from 366,975 in 2010 to 280,542 in 2011.  

António Horta-Osório, chief executive at Lloyds said: ‘We want to be the best bank for customers and that means we must offer them the highest standards of service.

‘I am pleased with the significant achievements we have made in reducing complaints in 2011. However, we need to keep improving and so we have set a new target for 2012 when we will aim to have no more than 1.3 complaints per 1,000 accounts.’

More on this…

  • Claim back your PPI – use our tool if you were mis-sold payment protection insurance
  • Are my savings safe? – check to see if you’re covered by the UK’s compensation scheme
  • Call the Which? Money Helpline – if you have a complaint about your bank
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