Lloyds Bonus Plan Gains Government Backing as RBS Snubbed
Lloyds Bonus Plan Gains Government Backing as RBS Snubbed: Britain's Chancellor of the Exchequer George Osborne (FRONT R) and Lloyds Banking Group chief executive Antonio Horta-Osorio (FRONT L)Reuters

Lloyds Banking Group has gained government support over its plan to pay staff up to 200% of their salaries in bonuses.

The UK finance ministry said in a statement that it will support Lloyds setting a bonus cap at a maximum of 2:1 although it snubbed the Royal Bank of Scotland's (RBS) similar bid for the same pay ratio.

Lloyds is just under 25% owned by the government and its largest investor is the UK Financial Investments (UKFI). It has to get permission from the government before it can start paying shareholders a dividend or changing remuneration details.

The government has now sold 36% of its original stake in Lloyds, which now stands at 24.9%.

"This represents good value for the taxpayer and the money will again be used to reduce the national debt," said Chancellor George Osborne at the time.

"This is another step in the government's long term economic plan to deliver a more secure and resilient economy. It is another step in repairing the banks, in reducing our national debt and in getting the taxpayer's money back."

In February, Lloyds aimed to boost the pay of 400 of its senior staff despite the firm still facing a raft of mis-selling scandals, fines, and IT glitches.

However, the group has already boosted its annual banker bonus pool by 10% to £395m (€478m, $655m) after the financial more than doubled its underlying profit to £6.2bn.

According to Lloyds' full year financial results, the group's chief executive Antonio Horta-Osorio will receive a £1.7m bonus award in deferred shares for five years, which is also subject to conditions.

His contract entitles him to a maximum annual award of 225% of his £1.061m basic salary.

However, the group still faces a number of mis-selling scandals and a regulator investigations into its IT systems as well as allegations over foreign exchange market manipulation.