Lloyds loss balloons to $4.38bn

Britain's state-rescued Lloyds Banking Group said Friday that its net loss surged to £2.78 billion (3.27 billion euros, $4.38 billion) in 2011 after the lender was hit by huge compensation claims.

LBG, which is 40-percent owned by the British government, said its loss after tax compared with net losses of £320 million in 2010. It also fell into a pre-tax loss of £3.54 billion after a pre-tax profit of £281 million in 2010.

The bank took a hit of £3.2 billion after being forced to compensate clients who were mis-sold payment protection insurance.

British banks last year lost a high court appeal against tighter regulation of PPI, which provides insurance for consumers should they fail to meet repayments on a credit product such as loans, mortgages or payment cards.

Stripping out the compensation payouts and other losses linked to the eurozone debt crisis, LBG's pre-tax profit rose by a fifth to £2.69 billion.

"The core business delivered a resilient performance," said LBG chief executive Antonio Horta-Osorio, who was forced to take a two-month break at the end of 2011 due to fatigue.

That prompted the Portuguese national to decline his annual bonus amid British public outrage over excessive banking-sector pay at state-rescued banks.

LBG on Friday said it had slashed its total bonus pool by 30 percent to £375 million compared with 2010. The bank meanwhile announced on Monday that it was clawing back some executive bonuses after LBG was hit by the PPI claims.

In total, LBG was clawing back more than £1.63 million, with former chief executive Eric Daniels losing 40 percent of his share bonus award.

PPI became controversial after it was revealed that numerous consumers had been sold the insurance without understanding that the cost was being added to their loan repayments. Britain has since banned simultaneous sales of PPI and credit products.

LBG has slashed more than 40,000 posts since 2009 as it looks to nurse its way back to health after its part-nationalisation at the height of the global financial crisis.

The lender, which was sunk by the ill-fated 2008 takeover of rival bank HBOS, is also cutting its international activities to 15 nations by 2014, compared with the current level of 30.

Horta-Osorio's predecessor Daniels left amid shareholder anger after he oversaw the government-brokered takeover of HBOS. Horta-Osorio formerly led Santander UK, the UK arm of the Spanish banking group.

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