Five questions answered on Lloyd Bank’s large pre-tax losses

£570m loss for 2012.

Lloyd Banking Group today posted huge pre-tax losses for 2012. We answer five questions on Lloyd’s current losses.

What’s the amount of Lloyd’s pre-tax losses?

The 39 per cent state owned group is reporting a £570m loss for 2012.

Why so much?

The bank set aside a £1.8bn rise in mis-selling provisions last year, which has dented its profit margins. Last week, it was also fined £4.3m for delaying compensation payments to customers over PPI mis-selling.

However, take away the money set aside for the mis-selling claims - £1.5bn for payment protection insurance and £310m for interest rate swaps – the lender said underlying pre-tax profit jumped from £638m to £2.6bn.

The consumer association Which? estimate that the bank’s latest update took the total amount set aside for PPI by the industry to £15bn.
Will Lloyd’s bankers still be getting their bonuses? 

Most likely. The bank has set aside £365m to pay staff bonuses and would hand its chief executive, Antonio Horta-Osorio, a deferred share award worth £1.49m.

"I came here with the main objective of getting taxpayers' money back and, therefore, I thought it would be appropriate to make my bonus entirely conditional to us getting to the taxpayer entry price," Lloyd’s Chief Executive Mr Horta-Osorio told journalists.

What else has he said in regards to this pre-tax loss?

In Lloyds’s annual report statement he said:

"Since setting out our strategy in June 2011, we have significantly strengthened the balance sheet and substantially improved efficiency and focus, while continuing to work through legacy issues.

"We are investing in our simple, lower-risk, customer-focused UK retail and commercial banking model, and in value-for-money products and better capabilities to continue to support UK households, businesses and communities."

What have the experts said?

The figures provided good news for the government former investment banker Heather McGregor told the BBC . "We hear that the government is looking to exit sooner rather than later, and if I was the government I would be doing that. I'd be looking at these figures going 'yes, I can get my money back much quicker'," she said.

Lloyd Banking Group today posted huge pre-tax losses for 2012. Photograh: Getty Images

Heidi Vella is a features writer for Nridigital.com

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How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.