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Former Lloyds boss Eric Daniels sues bank for withheld bonuses

Eric Daniels, the chief executive of Lloyds Bank when it was bailed out with £20bn of taxpayer money during the 2008 financial crisis, is suing the bank for hundreds of thousands of pounds in disputed bonuses.

Daniels, who was heavily criticised by politicians during his tenure at Lloyds, has filed a legal claim to try to collect some of his bonus payments that were withheld by the bank.

He is thought to be suing Lloyds, which he left in 2011 with a £5m pension pot, for as much as £500,000 in unpaid bonuses due in 2012. The Times, which first reported Daniels’ legal action, reported that sources with knowledge of the dispute said the executive was taking action to claim performance-related bonuses that were not paid despite him hitting targets.

Daniel’s case against Lloyds was filed with the high court on 14 August, but the legal claims are not yet publicly available.

His lawyer, Tom Custance, a partner at the law firm Fox Williams, confirmed the case, but said: “Our current instructions are not to make any comment in response to media enquiries about the claim.”

Custance helped the former Société Générale banker Raphael Geys secure a €12.5m (£11.5m) payout after convincing the supreme court that his employment contract had been wrongfully terminated.

A spokesman for Lloyds said: “As this matter is a live legal issue, it would be inappropriate to comment.”

Daniels, a 66-year-old American, has already had millions of pounds of bonuses clawed back owing to the bank’s mis-selling of payment protection insurance. During his tenure Lloyds was the biggest seller of PPI, and the scandal has so far cost the bank £18bn.

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Daniels told MPs in 2013 he thought Lloyds was on “the side of the angels” on PPI and that most of the policies his bank sold to cover people during illness or unemployment were sold correctly. That year, the bank claimed back most of Daniels’s £1.45m bonus for 2010, leaving him with £300,000, as the bill for PPI claims mounted.

Daniels, who has been nicknamed “the quiet American” in a nod to the Graham Greene novel, oversaw Lloyds TSB’s rescue of HBOS to form Lloyds Banking Group and a government bailout that left taxpayers owning 43% of the company at the height of the financial crisis.

In an interview with the Daily Telegraph in 2010, Daniels said he had done “the country a great service [by buying HBOS] by not costing the taxpayer a bomb”. He was heavily criticised by the Treasury select committee in 2010 when it was revealed he did not know how many of his staff were paid more than him.

Since leaving Lloyds, Daniels has taken on a string of jobs in the City, including at peer-to-peer lender Funding Circle, Mayfair-based investment bank StormHarbour and private equity firm CVC Capital Partners.

Lloyds finally emerged from partial state ownership in May when the government sold the last of its shares. Once operating in 30 countries, it now remains in just six, leaving it open to concern that it is vulnerable to any economic slowdown in the UK caused by Brexit.

Timeline

December 2002 Daniels is appointed chief executive of then Lloyds TSB.

Sept 2005 Citizens Advice publishes Protection Racket, a report identifying the problems in the PPI market.

September 2008 A £12bn takeover of HBOS by Lloyds TSB comes just days after the collapse of Lehman Brothers sent shockwaves through financial markets. The Financial Services Authority, then the City regulator, says the deal will “enhance finance stability”.

October 2008 As financial instability mounts the government announces a bailout of the banking system. Lloyds TSB renegotiates the takeover of HBOS.

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January 2009 Lloyds Banking Group is created from the purchase of HBOS by Lloyds TSB. The government begins the first of a three-tranche bailout of the group, pumping in £13bn.

May 2009 Sir Victor Blank steps down as chairman of Lloyds.

June 2009 The government puts a further £1.5bn into the group.

December 2009 The government backs a Lloyds cash call, buying £5.8bn of shares. The total rescue deal amounts to £20.3bn. The taxpayer stake stands at 43%.

March 2011 Eric Daniels leaves and António Horta-Osório takes over as chief executive.

April 2011 A high court judge backs the FSA’s argument that banks must address claims and face paying £4.5bn in compensation.

May 2011 Lloyds takes the first provision for PPI claims of £3.2bn. By 2017, the bank’s bill has topped £18bn.

Read more at www.theguardian.com

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