[ by Melanie Gretchen ] The Lloyds Banking Group is considering clawing back the bonuses of 5 former or current executive directors, after the bank last May took a charge of $5 billion (£3.2 billion) to compensate customers who were wrongfully sold insurance products.  Lloyds admitted that it sometimes sold payment protection insurance, in order to cover mortgage or other payments in case of unemployment, to customers who were not eligible for it. In addition to the 5 executive directors, the bank’s compensation committee is looking into clawing back bonuses paid to 8 managers.  All told, more than $3 million (£2 million) in bonuses - paid to directors and managers - may be rescinded. A New Trend. Lloyds Bank, which is partly owned by the British government - unable to repay the government for the bailout received during the financial crisis - this week became the first bank in Britain to review clawing back bonuses.  As a result of the $5 billion charge, the entire banking group slipped from a profit to a loss in the first quarter. On mainland Europe, Swiss bank UBS this month clawed back bonuses awarded to senior investment bankers for last year, after the securities unit discovered that $2.3 billion had been lost by a rogue trading scandal. Clawbacks. Lloyds bank decided to retain some 5%-40% of the deferred share bonuses awarded to the 13 individuals for 2010, because, had the provision been taken then, “the bonus pool would have been lower and individual bonus awards would also have been lower," Lloyds said.  The bank also said the overall bonus pool for 2011 would be smaller than initially planned. Among Those at Risk of Clawbacks. Eric Daniels, CEO at the time the insurance products were sold, stands to lose the most - up to 40% of his $917K (£580,000) share bonus for 2010, which had been deferred until 2013.  The following directors could each lose 25% of their 2010 deferred share bonuses - Archie Kane, who ran the insurance unit; Helen Weir, former head of consumer operations; Tim Tookey, finance chief; and Truett Tate, former head of the wholesale division. António Horta-Osório, the group's CEO since Mr. Daniels' departure, announced in January that he would not take a bonus for 2011 - in partial consideration for having taken 2 months medical leave (for exhaustion).

[C-I Note: Perhaps Mr. Horta-Osório anticipated that he might have to give back any 2011 bonus that he would receive.  We approve of the possible clawbacks, and admire the current CEO's foresight.]

[Dealbook, 2/21/12]