Lloyds Bank Scraps All Bonuses for 2020 After Pandemic Hammers Profit

Lloyds Banking Group Plc is canceling bonuses for all staff this year as the Covid-19 pandemic weighs heavily on its earnings.

A spokesperson for the bank confirmed it will not pay out any “group performance share” awards in 2020 after rewarding staff with about 310 million pounds ($419 million) last year. The news was reported earlier by the Financial Times.

Lloyds expects to set aside at least 4.5 billion pounds this year for loans likely to fail in the economic turmoil that’s accompanied the pandemic. While it swung to a profit in the third quarter, full-year net income is set to be sharply lower at about 1.1 billion pounds, compared to 2.5 billion pounds in 2019, according to data compiled by Bloomberg.

The lender previously said its executive committee had given up its bonus entitlements for the year. A spokesperson said on Friday most staff will receive above-inflation pay increases in 2021, particularly colleagues on lower wages.

The approach at Lloyds, Britain’s biggest mortgage lender, contrasts with rivals that are rewarding staff after their trading units boomed. Barclays Plc is likely to boost its bonus pool for traders this year by about 10%, Bloomberg News reported, while Deutsche Bank AG and JPMorgan Chase & Co. are also considering larger awards after market volatility during the pandemic lifted returns.

Last week, British lenders were given permission to resume dividends from next year, after scrapping payouts in March at the behest of the Bank of England. The move came with conditions from the regulator including a “high degree of caution and prudence” on cash bonuses for senior staff.

©2020 Bloomberg L.P.

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